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North Korea tries out private home ownership in Rason

Buildings in North Korea. (Nicor/Wikimedia Commons)
March 30, 2019
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This article was originally published by Radio Free Asia and is reprinted with permission.

North Korea is experimenting with private real estate ownership in the city of Rason, part of a special economic zone located in the country’s northeastern corner near China and Russia.

Private ownership of houses is technically illegal in North Korea. The constitution states that all property is owned by the state, and the government typically grants living spaces to its citizens for specific periods of time.

According to two June reports by United Press International, the rights to living spaces were being bought and sold as a loophole around this technicality. North Korea was said in one of the reports to be undergoing a real estate development boom as homes were coming to be owned by the state in name only.

RFA sources report that the government is trying out a de jure private ownership system in Rason. It will price state-owned houses and sell them to their current residents.

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“[The city] recently announced the requirements for home buyers to take ownership of their state-owned houses,” said a source in North Hamgyong province in an interview with RFA’s Korean Service on Mar. 19.

“[The country] is planning to privatize ownership of houses and people are really interested in this,” said the source.

“According to an announcement [by the city government], they will set a value for each house and if residents make payments, [the city] will give them the ownership of their house.”

“In North Korea, no one could own a house until now. It was impossible even for the rich and powerful,” the source said, adding, “People have been exchanging their houses or selling their rights to live in their houses but the state still had the ownership.”

The benefit of ownership will not be restricted only to those with the cash flow to purchase a home outright. The government wants to make ownership more widely available.

“[Buyers] can make a payment in full, or they can make monthly payments for up to 25 years,” the source said.

Just as in real estate markets around the world, each home will have a different value based on a number of factors, chief of which will be location.

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“The value of houses is dependent upon location and convenience in the surrounding area, access to transportation, year built and [amount of living space],” said the source.

The source was able to estimate the approximate value of the city’s homes, saying, “It is about $1-5 per square meter. There are cheaper homes in suburban areas that will go for as low as 300 Chinese Yuan ($44.71). But downtown apartments will cost more than $5,000.”

“There are people who would want to pay that amount to become homeowners,” the source said.

Legitimate home ownership may be cheaper than the de facto system in place.

“People make deals for apartments in the city, and pay tens of thousands of dollars to each other. But now people can have the right of ownership of their current house with much less,” said the source.

Under the new plan there will still be limits on ownership. Buyers will not be able to purchase more than one home.

“Even if you have a lot of money, you can’t own any property unless you are currently living in it,” the source said.

Regardless of the restrictions, Rason residents are quite enthusiastic about the idea of owning a home.

A second source from Rason said, “Ever since [the city] administration committee announced the new system, the housing market has been on fire!”

“The rich and high ranking government officials are all busy getting ready to buy their houses,” said the source, adding, “Once they pay for the house [it will be theirs], so they are all doing their best to find ways to buy their house,” the source said.

If the experiment proves successful, the source expects a real estate craze to sweep the entire country.

“Nationwide privatization of state-owned houses depends on Rason. This experiment is just a small step, but it is the first case of the state recognizing private ownership since the founding of the Democratic People’s Republic of Korea [in 1948].”

Reported by Jieun Kim for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Eugene Whong.

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