Soaring 'Real Estate Brokerage Fees' Following House Prices... Anti-Corruption Commission Recommends Improvements in January

House Price Cap Rate Over 900 Million Won Set at 0.9%... Anti-Corruption Commission Plans Improvement Recommendation to Ministry of Land

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[Asia Economy Reporter Moon Chaeseok] As housing prices have surged sharply, there have been concerns that brokerage fees paid to licensed real estate agents have also skyrocketed. In response, the Anti-Corruption and Civil Rights Commission (ACRC) is preparing measures to improve the brokerage fee calculation system. Consequently, real estate brokerage fees are expected to decrease from current levels.

On the 8th, an ACRC official stated, "Brokerage fees, which are ancillary costs other than the sale price, have surged rapidly without any factors other than rising housing prices, causing serious public dissatisfaction. Therefore, we plan to formally recommend policy improvements to the Ministry of Land, Infrastructure and Transport's Real Estate Industry Division next month."

Since January last year, the ACRC has been monitoring the trend of soaring brokerage fees and recently conducted an intensive analysis over the past six months. On the 16th of last month, they held a policy proposal forum on "Improving the Brokerage Fee Calculation System for Housing" together with the Korea Association of Licensed Real Estate Agents and the Korea Consumer Organization Council.

The ACRC plans to compile the results of the forum and surveys and soon recommend policy improvements to the Ministry of Land, Infrastructure and Transport. Specifically, they intend to prepare four scenarios: ▲ subdividing the upper limit brokerage fee rates for homes priced over 900 million KRW (based on sales) ▲ lowering the upper limit brokerage fee rate applied to transactions over 900 million KRW from 0.9% to 0.7% ▲ expanding statutory brokerage services provided by licensed real estate agents ▲ applying a fixed rate system by price segment after abolishing the 'upper limit rate system.' An ACRC official said, "We are reviewing whether to propose the first three measures or all four."

The reason the ACRC decided to recommend policy improvements is that as real estate sale and jeonse (long-term lease) prices have soared, many citizens feel burdened by the significantly increased brokerage fees.

According to a recent survey conducted by the ACRC targeting licensed real estate agents and the general public, 28.4% of respondents answered that the appropriate brokerage fee rate for homes priced over 900 million KRW is between 0.5% and 0.6%. Currently, the upper limit rate of 0.9% is applied.

The ACRC judged that the current brokerage fee system is not keeping pace with soaring housing prices. Last month, the average sale price of small-to-medium apartments in Seoul (exclusive area over 60㎡ to 85㎡ or approximately over 18.15 pyeong to 25.7125 pyeong) was 900.729 million KRW. The average apartment price for ordinary Seoul residents has far exceeded 900 million KRW, but the brokerage fee rate standard sharply increases for prices over 900 million KRW.

An ACRC official said, "Generally, the upper limit rate should increase proportionally as real estate transaction amounts increase or maintain a certain level regardless of transaction amounts. However, currently, the rate curve by housing price segment is '0.6% (under 50 million KRW) → 0.5% (50 million KRW to under 200 million KRW) → 0.4% (200 million KRW to under 600 million KRW) → 0.5% (600 million KRW to under 900 million KRW) → 0.9% (900 million KRW and above).' Since prices are distorted, system improvement is necessary," he said.

This content was produced with the assistance of AI translation services.