SEOUL- Lee Jae-myung became the presidential candidate for South Korea's ruling party on Sunday, hoping to overcome a property scandal and gather national support while conservative opponents trade barbs over anal acupuncture and fortune-tellers.

Lee, governor of Gyeonggi province and a party outsider often critical of incumbent President Moon Jae-in, sealed his victory in the primary to represent the Democratic Party in the March 9 presidential election. Moon cannot stand for re-election under Korean law.

The leading contender among a fractured field from the main conservative People Power Party, Yoon Seok-youl, has been caught up in scandals of his own - including murky ties to an anal acupuncturist - and criticism he relies on fortune-tellers.

"It used to be at most a single candidate who had such scandals, but the top two frontrunners are both embroiled in scandals in this election, which shows South Korea is regressing politically," Lee Jun-han, professor of political science at Incheon National University.

Lee secured 50.29% of the votes in an 11-round primary that ended on Sunday. His closest rival and initially the establishment favourite, former Prime Minister Lee Nak-yon, finished with 39.14%.

His outsider image was once seen as a liability in the face of establishment competitors with closer ties to the outgoing Moon, but Lee rose to prominence with an aggressive pandemic response and a populist economic agenda.

Dogged by a scandal involving a residential development plan when he was mayor of Seongnam in 2015, Lee used his acceptance speech to pledge progress on policy issues, including a push for universal basic income and more affordable housing amid skyrocketing property prices.

Next year's election represents "the ultimate battle against the corrupt establishment," he said.

Prosecutors and police have been investigating the Seongnam project amid controversy over Lee's ties to a former official, who has been arrested on corruption charges related to the deal.

Lee has denied any wrongdoing. His office did not respond to requests for comment.

Housing-related scandals are a particular sore spot for voters in South Korea, where home prices have soared beyond the reach of many. Lee's party has been damaged by allegations of property speculation.

On the other side, conservative Yoon - a former top prosecutor who joined the opposition after gaining prominence during a political fight with President Moon - was forced in a televised debate last week to distance himself from an unlicensed anal acupuncturist.

Yoon denied knowing the acupuncturist, and said he only "seldom" meets fortune-tellers or shamans, who practice an animistic ethnic religion of Korea which dates back to prehistory and are widely consulted in South Korea.

Yonhap news agency said prosecutors are investigating a political meddling scandal that possibly involves Yoon. It quoted him as calling the allegations a "political plot" to derail his candidacy.

Yoon has denied any wrongdoing while serving as a prosecutor. His campaign did not respond to Reuters' requests for comment.

His rival in the PPP primary, Hong Joon-pyo, on Saturday called a possible matchup between Lee and Yoon a "criminal election".

A combined survey by four polling services last week found Lee leading Yoon 44% to 33% in a hypothetical two-way race.

The conservatives made gains in local elections in April as the Democratic Party was mired in scandals, but the spats in the primaries over things like shamanism threaten their chances to capitalise in the regular election, said Yang Seung-ham, a longtime political analyst.

(Reporting by Josh Smith and Sangmi Cha; Additional reporting by Heejung Jung; Editing by William Mallard and Muralikumar Anantharaman) ((;))