Seoul Jeonse Prices Rise for 47th Week... 32 Million Won More for Renewal Contracts

Additional Costs for Jeonse Lease Renewals in Q1: 76.86 Million KRW in Gangnam-gu
14.38 Million KRW in Gyeonggi, 18.14 Million KRW in Incheon
Seoul Jeonse Prices Expected to Keep Rising as Home Purchases Delay

[Asia Economy Reporter Lim On-yu] It has been found that renewing an apartment jeonse lease in Seoul costs an average of 32.72 million KRW more. In particular, the renewal cost in Gangnam-gu, Seoul was the highest at 76.86 million KRW. Additionally, Gyeonggi Province incurred an extra cost of 14.38 million KRW, and Incheon 18.14 million KRW. Seoul's jeonse prices have been rising for 47 consecutive weeks. As the real estate market remains sluggish and apartment purchases are being delayed, the upward trend in jeonse renewal costs is expected to continue for some time.

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 most recent first quarter. Typically, after the usual two-year lease period, renewing the jeonse lease requires an additional 32.72 million KRW.

Looking at the renewal costs by Seoul autonomous districts, Gangnam had the highest first-quarter jeonse renewal cost 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). Conversely, Gangdong was the only district in Seoul where renewal costs decreased by 5.65 million KRW.

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

The highest quarterly jeonse renewal cost in Seoul since 2015 was in the fourth quarter of 2015, at 83.79 million KRW. During this period, large-scale reconstruction projects were underway in the Gangnam area, leading to relocations in Gaepo District in Gangnam, Godeok District in Gangdong, and Sinbanpo District in Seocho, resulting in a shortage of jeonse supply and a significant rise in renewal costs for surrounding apartments. 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.

In Gyeonggi Province, the jeonse renewal cost was 14.38 million KRW (from 263.66 million KRW to 278.04 million KRW). Within Gyeonggi, the highest renewal cost was in Gwacheon at 92.18 million KRW, followed by Bundang in Seongnam (47.32 million KRW), Sujeong in Seongnam (38 million KRW), Yeongtong in Suwon (29.86 million KRW), Gwangju (27.93 million KRW), and Gwangmyeong (24.66 million KRW). Conversely, renewal costs decreased in Danwon, Ansan (-18.42 million KRW), Sangnok, Ansan (-13.86 million KRW), Anseong (-4.4 million KRW), Yeoju (-3.38 million KRW), Ilsandong-gu, Goyang (-2.17 million KRW), Pyeongtaek (-1.59 million KRW), and Paju (-1.08 million KRW). In Incheon, the renewal cost was 18.14 million KRW (from 206.59 million KRW to 224.74 million KRW).

Jeonse renewal costs are largely influenced by the volume of new apartment move-ins and relocations or demolitions due to reconstruction. The nationwide supply of new apartments this year is expected to be slightly lower than usual. Additionally, the implementation of the private land pre-sale price ceiling system scheduled for the end of July is expected to increase relocation volumes, which may further drive up jeonse prices.

According to the Korea Real Estate Board, as of May 18, Seoul's jeonse prices rose by 0.02%, marking 47 consecutive weeks of increases since the first week of July last year. Cumulatively, prices have risen by 2.98% during this period.

The upward trend in jeonse renewal costs is expected to continue. Ham Young-jin, head of Zigbang Big Data Lab, explained, "Demand for apartment subscription or 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.