A significant number of real estate price collusion cases have been reported in South Korea's capital region. These practices involve residents intentionally agreeing to raise asking prices to inflate home values. Such actions are illegal and can lead to severe penalties, including prison sentences or substantial fines.
Key Takeaways
- Over 2,300 real estate price collusion cases reported from 2020 to 2024.
- The capital region accounts for 71.5% of all reported cases.
- Gyeonggi Province has the highest number of reports nationally, with 1,088 cases.
- Penalties for collusion include up to three years in prison or a 30 million won fine.
- The number of total reports has decreased, but police investigations have increased.
Capital Region Dominates Collusion Reports
Data from the Ministry of Land, Infrastructure and Transport shows 2,313 reports of real estate price collusion between 2020 and 2024. This information was obtained by Democratic Party of Korea Rep. Min Hong-cheol, a member of the National Assembly’s Land, Infrastructure and Transport Committee.
The majority of these reports, specifically 1,654 cases, originated from the capital region. This area includes Seoul, Gyeonggi Province, and Incheon. This figure represents 71.5% of all reported cases nationwide, highlighting a significant concentration of these illegal activities in Korea's most populous and economically active areas.
Fact: Legal Penalties
Real estate price collusion is defined as the intentional proposal of asking price collusion among residents. Individuals found guilty can face penalties of up to three years in prison or a fine of up to 30 million Korean won.
Gyeonggi Province Leads National Figures
Within the capital region, Gyeonggi Province recorded the highest number of collusion reports. It accounted for 1,088 cases, which is 47.1% of the national total. Seoul followed with 344 cases, making up 14.9% of the national reports. Incheon reported 222 cases, or 9.6% of the total.
Outside the capital region, Busan had the highest number of reports. Busan accounted for 287 cases, representing 43.5% of the 659 reports from non-capital areas. Daegu followed with 85 cases (3.7%), and Gyeongsangnam-do with 62 cases (2.7%).
Trend in Reports and Investigations
The revised Public Real Estate Agents Act, which criminalizes real estate price collusion, was implemented in 2020. Since its introduction, the total number of reports has shown a consistent annual decline. In 2020, there were 1,418 reported cases. This number significantly dropped to 66 cases last year.
For the first half of this year, only 49 cases were reported. This trend suggests that the legislation may be having an effect on the overall frequency of reported collusion incidents. However, another trend shows increased enforcement activity.
Context: The Public Real Estate Agents Act
The revised Public Real Estate Agents Act, enacted in 2020, specifically targets and penalizes practices of real estate price collusion. This law was introduced to combat market manipulation and stabilize property values. It gives authorities the power to investigate and prosecute individuals involved in artificial price inflation schemes.
Increased Police Investigations Highlight Enforcement
Despite the decrease in the total number of reports, the proportion of cases leading to police investigations has risen each year. In 2020, 46 cases, or 3.2% of the total, resulted in police investigations. This percentage increased to 3.0% (2 cases) last year, which may seem like a slight decrease in raw numbers, but the proportion relative to total cases remains notable.
More recently, in the first half of this year, 6 cases led to police investigations. This represents 12.2% of the 49 reported cases during that period. This indicates a stronger focus on pursuing legal action for the reported incidents.
Rep. Min Hong-cheol stated, "The concentration of real estate price collusion reports in the capital region and Busan highlights the severity of market distortion." He added, "To stabilize the real estate market, the government must further strengthen its investigation and response systems."
Government Response and Market Stability
The persistent issue of real estate price collusion, particularly in key urban centers, underscores challenges in maintaining a fair property market. The government's efforts to enhance investigation and response mechanisms are aimed at curbing these illegal activities. Such measures are critical for ensuring transparency and preventing artificial inflation of housing prices.
Stabilizing the real estate market is a priority for policymakers. The ongoing monitoring and enforcement of regulations are expected to deter future collusion. This approach seeks to protect consumers and promote a more equitable housing environment.
