The Surprisingly Long History of Real Estate

These days, the government’s real estate measures have caused a huge uproar. Most citizens are protesting the government’s policies, and some have even taken to the streets. Although this is not exactly a new issue, this particular case seems so far-reaching that there is no sign of the controversy dying down.

This raises an interesting question: is the real estate problem really something that emerged only in modern times? The answer, simply put, is no. Real estate problems existed in the past as well—indeed, from a very long time ago.

There is a record from the reign of King Myeongjong of Goryeo stating that the wife of the scholar Geukcheong No bought a house for 9 geun of silver and later resold it to a man named Deoksu Hyeon for 12 geun of silver. At the time, the value of 1 geun of silver was equivalent to 100 bolts of hemp cloth. Considering that ordinary people lived in an age when saving even a single bolt of hemp cloth was difficult, one can imagine how hard it must have been to buy a house in the capital, Gaegyeong. It is also said that the closer a house was to the royal palace, the more expensive it was. In other words, people 1,000 years ago engaged in economic activity in much the same way modern people do.

In the Joseon Dynasty as well, real estate problems remained a constant issue, and the situation in the capital, Hanyang, is said to have been especially severe. Hanyang had originally been built with a target population of around 100,000, but as the number of residents later far exceeded that benchmark, the housing shortage worsened and residential difficulties deepened. Moreover, while homes in Namsan-gol, where commoners mainly lived, could be bought for about two years’ salary of a low-ranking official of junior ninth rank, in Insadong a house reportedly cost as much as 50 years’ salary of the same rank. This suggests that the disparity between neighborhoods was also quite large.

In particular, high-ranking officials became a problem by purchasing relatively cheap thatched-roof houses and remodeling them into expensive tiled-roof houses, thereby driving housing prices up sharply. Whenever the real estate issue came up, the royal court imposed various regulations in an attempt to control prices, but the situation rarely improved. The more it did so, the more wealthy scholar-officials bought up the homes of low-ranking officials and the middle class in pursuit of capital gains. As a result, the court’s measures did nothing except further fuel housing speculation.

Amid this situation, the event sparked by soldiers who could no longer afford absurdly inflated housing prices—combined with accumulated discriminatory treatment—was precisely the Imo Military Revolt. At the time, after going unpaid for over a year, soldiers were driven out even from the jeonse homes they had been renting and found themselves with nowhere to go, which led them to rise up. This incident caused major political turmoil as well, showing that, both in the past and today, the ripple effects of real estate problems can be enormous.

Across all times and places, government intervention that ignores market supply and demand has always produced poor results. That was true in the feudal past, and it remains true in modern society today. In other words, there has been no exception throughout history. It will likely remain difficult to hear anyone say that the government can defeat the market. That is why it is hard to place much hope in the government’s real estate control policies. Therefore, rather than relying simply on government intervention, it is necessary to seek solutions through a different kind of approach.

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Original title: 생각보다 오래된 부동산의 역사

Author: Seong-u Jeong

Date: 2020-08-25

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=13&idx=23029