Following an unprecedented period of growth, North Korea’s real estate market is experiencing a downturn following the adoption of international sanctions. In addition to fluctuating prices in the general markets, the value of major new apartment developments as well as smaller housing projects have seen a sizable drop in recent months.
“The disruption in trade with China has led to market instability, which in turn has affected housing prices in the main districts of Sinuiju. While units were being sold for tens of thousands of dollars (USD) just last year, prices began to drop this past spring, and have only continued to fall since then,” a source in North Pyongan Province informed Daily NK on October 23.
The recent downturn amounts to a rather significant 30% drop in housing value in Sinuiju. “Fall is usually peak season for housing sales, but all this talk of war has caused a sharp decline in customer interest. Just last fall, newly-built modern apartment units were selling for $100,000 USD, but now even $70,000 USD is considered too high,” the source added.
As a result, the trading companies responsible for construction and sales of these units have found themselves in a predicament. While they continue to ask for prices considered acceptable in the past, insisting that trade will resume again soon, buyers are demanding prices that reflect the recent drop in value. The real estate market in Sinuiju has slowed due to this standoff between buyers and sellers.
Sinuiju’s housing market, the second-most valuable in North Korea behind Pyongyang, has seen constant year-on-year growth. The districts near the customs entry point and the main train station have seen the most development, keeping pace with a general upward trend in cross-border trade.
But the loss of trade activity due to sanctions has crippled the local economies in these areas. Less traffic means less money in circulation and less confidence in the market, leading naturally to a weakened housing market.
“Other cities are experiencing a similar shock to their housing markets as well. The value of homes in Pyongsong and Sunchon were skyrocketing before the latest crisis, but have dropped significantly in recent months,” a source in South Pyongan Province explained.
“In Pyongsong, an apartment near the train station was going for $60,000 just this past January, but the value has now dropped to $50,000. Even homes outside the city that were once being sold for $5,000 are now going for around $3,200. Buyers are becoming more emboldened while sellers are losing their leverage, and prices continue to drop as a result.”
Meanwhile, the real estate market for new developments has also been affected by ordinary people and merchants selling their own homes.
The source described how “many people are looking to rent a room in makeshift share houses after selling their own homes, though rental prices have doubled from around 50,000 KPW to 100,000 KPW per month. Rent for these rooms in the major cities is now as high as $30 per month.”
In this way, stalled trade activities and a shift in demand to cheaper options such as private homes have fueled the current real estate market crisis, and demand for newer developments is not likely to return to prior levels until cross-border trade resumes.
