"Residents... vs Real Estate Cartel..." Mokdong Apartment Price Collusion Controversy

Conflict Surfaces as Investors Flock Due to Reconstruction Boom
Historic Mokdong Real Estate Cartel Claims 'Price Manipulation'
"Elders Suffer Losses Trusting Brokers"
Some Point Out Residents' Collusion Is Also Significant

[Asia Economy Reporter Moon Jae-won] Conflicts are escalating between local real estate agencies and residents over apartment prices in the Mokdong New Town area of Yangcheon-gu, Seoul, which has been buzzing with successive reconstruction prospects. While frontline agencies are trying to lower prices to close deals, residents are raising their asking prices due to expectations of reconstruction.

Some claim that real estate agencies are artificially adjusting prices by forming cartels under the pretext of social clubs, while counterarguments suggest that residents are colluding to raise asking prices, indicating that the controversy is likely to intensify.

According to the real estate industry in the Mokdong New Town area on the 8th, investment demand has been flowing in as favorable conditions continue, such as the recent zoning upgrade of complexes 1 to 3 from Type 2 General Residential Area to Type 3 General Residential Area, and complex 6 passing the first phase of detailed safety inspection for reconstruction.

The problem is that conflicts between real estate agencies and residents over housing prices are also surfacing during this process. Recently, residents of complexes 11 and 12 hung banners throughout their complexes stating, "We do not use real estate agencies that belittle our value." Although they claimed it was a 'Real Estate Clean Campaign,' it is analyzed as a protest against the so-called 'real estate agency cartel's' artificial price manipulation.

The 'real estate agency cartel' pointed out by residents refers to a long-standing industry social group active in this area. A nearby agency representative said, "There are two cartels: 'Mokgonghoe' for complexes 1 to 7 and 'Haenurihoe' for complexes 8 to 14." It is known that about 100 agency representatives are active in each group.

A relatively new agency in the area explained, "They only share property listings among agents belonging to the same social club and restrict the entry of new agents."

A representative of agency A near complex 6 said, "Many agencies delete listings posted on portals after transactions are completed to hide whether the deal was made and the exact transaction price," adding, "Real transaction reports are also delayed as much as possible, so during price increases, homeowners sometimes fail to ask the right price because they do not fully understand the situation." He explained that since transactions inevitably decrease if asking prices are too high, agencies set upper limits and guide transactions accordingly.

Apartment Complex in Yangcheon-gu, Seoul (Photo by Yonhap News)

A representative of nearby agency B said, "They limit the number of listings each agency can post on Naver and block high-priced listings from being posted," adding, "Agencies that do not comply are covertly disadvantaged."

Residents say that although conflicts have surfaced mainly in complexes 11 and 12, which consist mostly of small-sized units with active transactions, the situation is similar in other complexes within the New Town. A resident of complex 7 said, "Elderly people who are not familiar with computers often trust the agencies and end up selling for several hundred million won less than market value."

Some point out that collusion among homeowners to excessively raise asking prices is also significant. A representative of agency C near complex 3 said, "Some residents report low-priced listings on Naver as false listings, causing agencies to be contacted by Naver," adding, "Although overt collusion is no longer done due to crackdowns, collusion still occurs mainly through online cafes and KakaoTalk chat rooms."

A representative of agency D near complex 11 said, "Some agents delayed deleting completed transactions from portals because they were busy, but we have never posted false listings or manipulated prices," adding, "We understand homeowners want to sell at the highest possible price, but it is excessive."

Meanwhile, apartments in the Mokdong New Town area have been showing a lone upward trend after the government's December 16 measures, while reconstruction-promoting complexes in the Gangnam area have weakened. The asking price for a 47㎡ unit in complex 6 was up to 1 billion KRW at the end of last year but has now risen to 1.15 billion KRW. For a 142㎡ unit that sold for 2.2 billion KRW at the end of last year, the current asking price has soared to 2.6 billion KRW.