Won Hee-ryong, Minister of Land, Infrastructure and Transport, ordered thorough investigations and strict punishments for market distortion activities such as inflating actual transaction prices in the real estate market.
On the afternoon of the 12th, Won Hee-ryong, Minister of Land, Infrastructure and Transport, ordered strict measures to be taken by each agency at the 'Measures to Eradicate Speculative Forces in Housing Prices' meeting held at the Korea Real Estate Board Seoul Gangnam Branch. / Photo by Ministry of Land, Infrastructure and Transport
On the afternoon of the 12th, Minister Won stated at the 'Measures to Eradicate House Price Manipulation Forces' meeting held at the Korea Real Estate Board Seoul Gangnam Branch, "Market disruption activities are serious crimes."
He also urged the Korea Association of Realtors, saying, "Despite many self-regulatory efforts such as preventing jeonse fraud, illegal brokerage practices still persist," and requested, "Please strengthen cooperation between the association’s own reporting center and the Korea Real Estate Board’s disruption reporting center to root out house price collusion forces."
He added, "Since the Real Estate Board is responsible for monitoring, planned investigations, and operating the reporting center to eradicate real estate disruption activities, please ensure thorough verification and investigation in your duties."
According to the 'Status of Market Disruption Activities by House Price Manipulation Forces and Investigation Progress' reported by the Real Estate Board, the rate of cancellation of reported prices within three months after contract has gradually decreased from 88.6% to 57.4% and then to 41.8% since 2021. On the other hand, the cancellation rate after six months from the contract has sharply increased from 1.7% to 11.4% and then to 44.3%. In response, the reporting center has been conducting a planned investigation since last month on cases suspected of inflating actual transaction prices. The investigation period is three months.
Direct apartment transactions without going through a licensed realtor have steadily increased since 2021, reaching a record high of 21.4% (32.8% in Seoul) in the fourth quarter of last year. However, since the Ministry of Land, Infrastructure and Transport launched a planned investigation into direct transactions in November last year, the rate has decreased to 11.7% (7.8% in Seoul) in the first quarter of this year. Currently, the reporting center is conducting a second planned investigation on direct transactions from this month through May.
House price collusion cases surged to 2,221 immediately after the prohibition regulation was introduced in 2020. However, due to continuous penalties for violations and a decrease in total transactions caused by the economic downturn, the number has sharply dropped to around 120 as of March this year.
At the meeting, Professor Yeom Yoo-sik of Yonsei University’s Department of Sociology gave a presentation titled 'Analysis Cases and Implications of Jeonse Fraud Using Social Network Analysis Techniques.' Professor Yeom introduced cases analyzing the connection structures among parties involved in jeonse fraud and explained that such analytical techniques could be applied to detect house price manipulation forces.
The Ministry of Land, Infrastructure and Transport stated that it will pilot the application of social network analysis techniques when necessary to identify the actual situation of house price manipulation forces and, if meaningful results are obtained, will utilize them for regular investigations in the future. It also explained that it is concurrently working on institutional improvements such as promoting the display of registration status in the actual transaction price disclosure system, strengthening penalties for false reporting of actual transactions, and expanding the reporting targets and processing tasks of the reporting center.
Minister Won said, "This policy meeting was a meaningful occasion where related agencies and associations gathered to pledge full efforts to eradicate house price manipulation forces," and added, "I hope that through everyone’s efforts, a sound and transparent real estate transaction order will be established."
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