In Q1, Seoul Apartment Jeonse Lease Renewals Cost 32.72 Million Won More

This Year’s Jeonse Renewal Costs Expected to Rise Due to Decreased Housing Supply and Weakened Buying Demand

[Asia Economy Reporter Lim On-yu] In the first quarter of this year, renewing a two-year jeonse contract in Seoul required an additional cost of over 32 million KRW. With a decrease in the supply of move-in units expected and a continued trend of delaying purchases due to the real estate market downturn, the rise in jeonse renewal costs is expected to continue this year.

According to Zigbang on the 18th, the average jeonse price for apartments in Seoul rose from 437.08 million KRW in the first quarter of 2018 to 469.8 million KRW in the last quarter. Typically, to renew a jeonse contract after the usual two-year lease period, an additional 32.72 million KRW was required.

In Gyeonggi Province, the jeonse renewal cost was 14.38 million KRW (from 263.66 million KRW to 278.04 million KRW), and in Incheon, it was 18.14 million KRW (from 206.59 million KRW to 224.74 million KRW).

Jeonse renewal costs tended to slow down or decrease when there was a large supply of new apartment move-ins. Conversely, during periods with relatively fewer move-in units, renewal costs showed an increasing trend.

The highest quarterly jeonse renewal cost in Seoul since 2015 was in the fourth quarter of 2015, reaching 83.79 million KRW. During this period, large-scale reconstruction projects were underway in the Gangnam area, leading to relocations in Gaepo District, Gangdong Godeok District, Seocho Sinbanpo District, and others. Due to the shortage of jeonse units, renewal costs for nearby apartments surged significantly.

On the other hand, the lowest renewal cost since 2015 was in the second quarter of 2019, at 9.82 million KRW, which is attributed to an increase in new apartment move-ins in Gangdong.

Looking at the first quarter jeonse renewal costs by city, Seoul had the highest average at 32.72 million KRW. In particular, Gangnam recorded the highest at 76.86 million KRW. This was followed by Jongno (49.4 million KRW), Seongdong (48.52 million KRW), Yangcheon (47.55 million KRW), Seocho (44.36 million KRW), Songpa (44.33 million KRW), Mapo (39.09 million KRW), Yongsan (34.91 million KRW), Gwangjin (34.26 million KRW), and Yeongdeungpo (32.84 million KRW). In contrast, Gangdong was the only district where renewal costs decreased by 565,000 KRW. Zigbang explained, "This is analyzed to be influenced by the increase in supply due to new apartment move-ins continuing since 2019."

Following Seoul, the cities with the highest jeonse renewal costs were Sejong (32.19 million KRW), Daejeon (26.11 million KRW), Daegu (23.53 million KRW), Incheon (18.14 million KRW), Chungnam (15.51 million KRW), and Gyeonggi (14.38 million KRW).

In Gyeonggi Province, Gwacheon had the highest jeonse renewal cost at 92.18 million KRW. This was followed by Seongnam Bundang (47.32 million KRW), Seongnam Sujeong (38 million KRW), Suwon Yeongtong (29.86 million KRW), Gwangju (27.93 million KRW), and Gwangmyeong (24.66 million KRW).

Conversely, areas that saw a reduction in jeonse renewal burden included Ansan Danwon (-18.42 million KRW), Ansan Sangnok (-13.86 million KRW), Anseong (-4.4 million KRW), Yeoju (-3.38 million KRW), Goyang Ilsandong-gu (-2.17 million KRW), Pyeongtaek (-1.59 million KRW), and Paju (-1.08 million KRW).

Jeonse renewal costs are analyzed to be heavily influenced by the supply of new apartment move-ins and the volume of relocations and demolitions due to reconstruction. The nationwide supply of new apartment move-ins this year is likely to be slightly lower than in previous years. Additionally, the implementation of the private land sale price ceiling system scheduled for the end of July is expected to increase relocation volumes, which will impact jeonse price increases.

The upward trend in jeonse renewal costs is expected to continue. Zigbang stated, "Demand for apartment subscription and new apartments remains steady," adding, "Tenants are likely to continue postponing home purchases to apply for subscriptions or are holding off on buying amid a weak apartment sales market, so jeonse and monthly rent transactions are expected to continue steadily."

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