"Seoul Jeonse Prices Rise Further"... Jeonse Outlook Index Hits New High Again

January Jeonse Outlook Index 118... Highest Ever
Surge in Jeonse Demand After 12·16 Measures Announcement
Second-Year New Apartments Jump Over 100 Million Won

Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Jiwon] Since the announcement of the December 16 real estate measures last year, Seoul's jeonse prices have been soaring, and frontline real estate agents are forecasting that jeonse prices are likely to rise even more sharply in the future.

According to the housing price trend data from KB Kookmin Bank's Live On on the 31st, Seoul's jeonse outlook index recorded 118 this month. This is the highest since the related statistical data began to be compiled in January 2016.

This index numerically represents real estate agents' forecasts for jeonse prices, with 100 as the baseline; a value above 100 indicates a price increase, while below 100 indicates a decrease.

The jeonse outlook index reached a record high of 117.3 in December last year due to the impact of the December 16 measures. However, the index rose further as the government introduced additional regulations, such as banning jeonse loans for homeowners with properties valued over 900 million won.

By region, among the 25 autonomous districts, the index for the 11 districts south of the Han River was 119.3, the highest in 3 years and 3 months since October 2016 (119.7).

In reality, jeonse prices have surged by more than 10 million won recently, especially in newly built apartments in Seoul. According to KB Kookmin Bank data, the jeonse price of second-year new apartments was about 686 million won in December 2018 but rose to 790 million won as of the 13th of this month, an increase of 10.4 million won (15.2%). The average jeonse price per household in Seoul also increased by 15 million won during the same period, reaching 477 million won.

A representative from real estate agency A in Daechi-dong said, "Since the government has blocked loans, jeonse demand is increasing, and prices inevitably rise accordingly," adding, "This trend is likely to continue for the time being." However, the jeonse index for the 14 districts in Gangbuk decreased slightly to 116.7 from 119.1 the previous month.

Some speculate that if the jeonse price surge continues, the government may introduce additional measures such as the jeonse rent cap system and the right to request contract renewal. Earlier, President Moon Jae-in pointed out the sharp rise in jeonse prices caused by the balloon effect during the New Year's press conference and stated, "We will devise supplementary measures."

Currently, the Ministry of Justice is reportedly reviewing legislation for the introduction of the jeonse rent cap system and the right to request contract renewal. These systems were also discussed in the National Assembly in 2014 and 2016 but were not enacted due to concerns that they might cause greater adverse effects.

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