Mechanisms of housing marketisation in North Korea

Abstract

In North Korea, the government establishes housing plans, and only organizations designated by the government can execute construction projects. Additionally, the Democratic People's Republic of Korea (North Korea: hereinafter, called DPRK) strictly prohibits housing exchange, leasing, and trading (hereinafter marketisation of housing) for private interest. The purpose of this study is to clarify how the marketisation of housing is possible under such a social system.In this study, as the background of marketisation of housing, we considered the lack of housing supply, the activation of jangmadang (local markets and black markets), the birth of Donju (nouveau riches), changes of constructors, the alteration of consciousness, the investment in real estates, and the deterioration of housing. This study examined whether housing marketisation has become normal through surveying North Korean defectors. Finally, we investigated the mechanisms of housing marketisation by dividing the mechanisms into ‘construction by ordering organizations and private investors’ and ‘construction by private investors.Although housing marketisation is illegal in the DPRK, authorities connive the marketisation in order to accomplish the target of controlling the national housing supply utilizing private capital. Additionally, we found that lobbying activities and bribery accompany every stage of the construction in the construction by ordering organizations and private investors and in the construction by private investors.Due to such an abnormal system, irregularities and corruption are prevalent in the construction process and cause serious side-effects including poor construction quality and problems in safety control. Housing marketisation is an inevitable phenomenon in the DPRK. It seems that the DPRK should introduce a system of housing marketisation across the board for the establishment of a sound social infrastructure in the country and the promotion of foreign investment.