SEOUL — The 10 people bought $8.8 million worth of land in an undeveloped area southwest of Seoul, registering it for farming and planting numerous trees. It’s a common trick used by shady real estate speculators in South Korea: Once the area is taken over for housing development, the developers must pay not only for the land, but the trees, too.
A national outrage erupted this month when South Koreans learned that the 10 people were officials from the Korea Land and Housing Corporation (LH) — the government agency in charge of building new towns and housing — suspected of using privileged information to cash in on government housing development programs.
The incident has thrown President Moon Jae-in’s government into crisis mode just weeks before key mayoral elections that are largely seen as a referendum on him and his party ahead of next year’s presidential race. Young South Koreans are saying they are fed up with corruption and the president’s failed policies on runaway housing prices. The LH scandal is now set to become a critical voter issue in Mr. Moon’s final year in office.
“When my girlfriend and I discuss how we are going to find a house in Seoul for the family we are going to start, we can’t find an answer,” said Park Young-sik, 29, an office worker. “The LH scandal shows how some people in South Korea make a quick fortune through real-estate foul play, while the rest of us can barely buy a house even if we toil and save for a lifetime.”
Seoul and Busan — go to the polls on April 7 to choose their mayors, and many observers said the elections could reflect poorly on Mr. Moon’s performance. Survey results showed that the LH news was dragging down approval ratings for both him and his party, most sharply among South Koreans in their 20s.
“I am sorry for worrying the people greatly, and for deeply disappointing those people who have lived honestly,” Mr. Moon said last week, vowing to eliminate “real estate corruption widespread in our society” as a priority of his last year in power.
Apartment prices in Seoul have soared by 58 percent during Mr. Moon’s tenure, according to data from the government-run Korea Real Estate Board. Some of the units in popular residential districts in Seoul have nearly doubled in price in the same period.
Rising housing costs have been blamed for creating a vicious cycle in which families believe real estate investments are foolproof, despite being warned otherwise by the authorities. Experts believe the soaring housing costs have also contributed to the country’s declining fertility rate, one of the lowest in the world, by discouraging young Koreans from starting a family.
The insidious divide among young people in South Korea has become a popular topic in K-dramas and films, including Bong Joon Ho’s “Parasite.” The “dirt-spoons” struggle to manage an ever-expanding income gap while the “gold-spoons,” the children of the elites, glide through a life of privilege. The problem also featured prominently in the real-life downfall of the former president, Park Geun-hye, and the jailing of the Samsung Electronics vice chairman, Lee Jae-yong.