The North Korean law makes it quite clear: It is illegal in North Korea to buy, sell and rent out houses. It is theoretically possible to swap houses within one jurisdiction, but it is still illegal if such an exchange is made to gain any kind of financial advantage for either side.
But in the last 15-20 years this, like many other North Korean regulations, has been honored in the breach. The first sprouts of the North Korean real estate market began to appear around 1990. But from around 2000, the North Koreans began to sell and buy housing with far greater ease. It is a now-universal assumption that housing is something not distributed by the state but to be bought and sold by all with the requisite funds (i.e. the super-rich).
Westerners used to European (or should we say North European?) culture are surprised at the idea that people can buy and sell houses when such activities are illegal, and when private ownership is legally impossible. There is one exception, that being houses that were private property prior to 1958 and which are still lived in by persons who owned those houses in 1958 – or their descendants. However, such houses are very rare even in the countryside and essentially non-existent in major cities where all housing – including the vast majority of humble, one-story houses – is technically owned by the state.
One should therefore not be too surprised that North Koreans tend to perceive such residency certificates as property deeds
Technically, North Koreans have no property rights with respect to their dwellings, but they have residency rights confirmed by a document known as an ipsajung (a proof of having moved in), issued by municipal governments. Such residence certificates do not have an expiration date, and it was indeed very unusual when people were evicted from their houses up to the 1960s. One should therefore not be too surprised that North Koreans tend to perceive such residency certificates as property deeds.
Therefore, around 2000, when the North Korean people began to buy and sell their houses, they did not care too much about paperwork. They assumed that once they acquired residency certificates for a particular property, they assumed that they were its owners. Judging by historic experience, they are quite correct to make such assumptions.
Legally, private property comes with certain specific rights. These include the right to control and manage a property, to dispose of it (sell, burn, eat etc.), to derive an income from the property (rent, for instance), and to restrict access to it. In these regards, North Koreans have effectively become home owners, because under socialism they controlled and restricted access to their houses, and under the new system grassroots capitalism with North Korean characteristics, there are a growing number of people exercising their de facto right to sell their house, or rent it out. Under both socialism and the contemporary system, North Koreans were in charge of how houses were decorated and the content of their gardens (so they had management rights).
When a deal is made, the buyer and seller go to the local city council where they are issued a new residency certificate under his/her name, while the old certificate is cancelled. Surprisingly, this operation does not appear expensive. Some North Koreans with whom I have discussed the subject assure me that it would suffice to give a city official a pack of good cigarettes or a bottle of liquor. Most would admit that a more convention monetary payment was expected. Nonetheless, we are not talking huge sums: between $50-100 would suffice.
As is reasonably widely known, the last 10 years has seen a dramatic rise in house prices in North Korea. The median price of a house in Pyongyang was close to $5,000, or somewhat less. Now, a really good house in Pyongyang (built in the last 25 years or so, with a supply of hot/cold water and an individual bathroom) would cost you $100,000, while the median price seems to be $70,000-80,000. Of course, the greenback is the best monetary unit to cite when real estate is discussed in North Korea because virtually all payments are made in U.S. dollars (cash, of course). It is remarkable that a corresponding rise in real estate prices has also occurred across the rest of the country. It seems that in all cities for which we have some data, real estate prices in the 2005-15 period have increased seven-to-10 fold. This fact alone speaks volumes about the oft repeated and widely believed assumption that economic improvements in North Korea of the last decade is largely limited to Pyongyang while the countryside still supposedly lives in the same destitution as before.
Real estate in the North is bought for the same reasons as in other parts of the world: i.e. to earn income. This is yet more proof that North Korea is becoming a normal capitalist country.
A widespread determinant of property prices is proximity to markets – the closer the more expensive. The difference might be very large; in fact, a similar house located a couple of hundred meters from a market will fetch a price two or three times higher than a house of exactly the same construction several miles away.
‘It is good to have a house near markets; you don’t work much, you don’t worry much, but money still finds you’
One of the reasons why markets have such an impact on price is that nearly all people who can afford a new house are somehow related to the new market economy and would like to live close to the center of their office area. However, there are two other reasons too: First, houses and even apartments when located near markets can be used as storage and are thus a useful source of income in their own right. Second, the same apartments can also be rented out as accommodation for merchants and/or office space. As a North Korean noted to me: “It is good to have a house near markets; you don’t work much, you don’t worry much, but money still finds you.”
Another expensive neighborhood is the area around railway stations. Perhaps in most cities of the world, people would like to avoid such areas that tend to be dirty, noisy and unruly, if not crime-infested. However, this is not the case in North Korea where houses near the stations can be used as storage facilities and improvised inns.
Another influence on prices is proximity to universities. Since the 1990s, wealthier students began to live in rented accommodation rather than poorly heated and rundown dormitories. North Koreans have essentially reinvented the Hasuk culture of South Korea. Thus students can find room and board in the area surrounding their colleges. It is not cheap but, generally speaking, after 2000 a significant part of the North Korean population cannot afford to send their children to college any more. Nonetheless, the more affluent make enough to create opportunities for Hasuk owners to make money.
There are more extreme cases of houses located near main roads selling for higher prices. Again, this might go against accepted wisdom in the West – who in London would want to live on the A3? However, such housing is great for North Korean merchants dealing in petrol and diesel as makeshift petrol stations. North Korean merchants have been known to neglect housing and build new gas stations that are thinly disguised as private houses.
Of course, owners of such private inns, storehouses and fuel stations do not technically enjoy property rights over their assets. However, this is not something that keeps them up at night; they probably have more important things to worry about.
The North Korean law makes it quite clear: It is illegal in North Korea to buy, sell and rent out houses. It is theoretically possible to swap houses within one jurisdiction, but it is still illegal if such an exchange is made to gain any kind of financial advantage for either side.But in the last 15-20 years this, like many other North Korean regulations, has been honored in the breach. The
Andrei Lankov is a Director at NK News and writes exclusively for the site as one of the world's leading authorities on North Korea. A graduate of Leningrad State University, he attended Pyongyang's Kim Il Sung University from 1984-5 - an experience you can read about here. In addition to his writing, he is also a Professor at Kookmin University.