New Measures to Curb Housing Prices

From now on, if apartment housewives association places postings that read, “Don’t ever sell the house below certain amount of money,” or pressures real estate dealers to increase apartment prices, the actual transaction prices of those apartments will be disclosed to the public first.

On July 11, the Ministry of Construction and Transportation (MOCT) announced “Measures Against Housewives Associations Colluding Housing Prices,” including such details. Hence, the public is interested whether such measures will actually reduce housing price collusion.

Request Housing Price Providers to Stop Providing Information to Price Collusion Apartments—

The core of the government’s countermeasures against housewives associations fixing prices is disclosing actual transaction prices.

The government decided to receive reports on price collusion through the MOCT website www.moct.go.kr or by phone (02-2110-8632). If reports come in from real estate dealers or others, a MOCT official will go to the scene and find evidence such as pamphlets or banners urging price collusion.

Apartments whose prices have risen by over five percent during a period of one week are also subject to investigation.

MOCT decided to regularly disclose the names, sizes and actual transaction prices of apartment complexes where price collusion has been confirmed on its website.

It also decided to request real estate information providers, including Kookmin Bank, to temporarily halt providing market prices to apartment complexes found guilty of price collusion.

However, for the time being, it decided to withhold filing direct criminal charges against the housewives associations.

MOCT Land Planning Officer Park Sang-woo said, “Although we can charge the housewives associations’ price collusion under Real Estate Dealership Law as acts to disturb the market, we plan not to do so, and let the associations restrain themselves and disclose actual transaction prices.”

Some Price Colluded Apartments are 100 Million Won More Expensive Than Actual Transaction Values—

MOCT also exposed eight apartment complexes in the Seoul Metropolitan area where price fixing had occurred.

The actual transaction price of a 32-pyong house of apartment complex A located in Shinnae-dong, Jungnang-gu, Seoul, is between 179 to 280 million won. However the housewives association set the price at 320 million won, or 40 to 141 million won more expensive than the actual price.

A 49-pyong house in apartment complex G, in Hwajeong-dong, Goyang City, is actually bought and sold at prices between 429-530 million won, but the price was fixed at 600 million won.

No price collusion was found at the so-called “bubble seven” area apartment complexes. Regarding this aspect, MOCT explained that the recent price collusion occurred in places where housing prices have relatively soared less than Seoul’s Gangnam area.

The housewives associations of the accused areas are protesting.

Ms. Shim, the president of housewives association of apartment complex B in Gwannak-gu, Seoul, claimed, “The prices of apartments in adjacent areas such as Dongjak-gu, rose over 100 million won during the past two to three years, but our prices are still the same. It is unfair to make a problem out of correcting under-valued house prices.”

Housing Prices Will be Controlled vs. Raised—

The responses forecasting the effectiveness of the current measures are divided.

Real estate dealers that underwent difficulties in making deals due to the pressure of housewives association are welcoming the measures.

Shinnae Real Estate Agency owner Nam Sang-yeon predicted, “It is true that until now the dealers had to beware of the housewives association. In the future, it will be difficult for the housewives association to openly demand to raise the prices of their houses.”

Kookmin Bank also decided to accept MOCT’s request to stop providing information, but other real estate information providers are protesting or skeptical about the effectiveness of the measures.

Deputy Director of Real Estate 114, a real estate information provider, Kim Kyu-jeong commented, “I doubt whether halting providing market prices of the concerned apartment complexes will reduce price collusion. Some times the actual transaction prices might be higher than the market price, and in this case, contrary to the government’s intention, it might result in raising housing prices.”

Joong-Hyun Park sanjuck@donga.com abc@donga.com