Seoul Jeonse Market in Turmoil as Gangbuk 84㎡ Jeonse Price Hits 1 Billion Won...

Landlords Switching to Semi-Jeonse Amid Owner Occupancy
Deposit Reassessment Movements Overlap
Eunma Jeonse Listings Down 80% in a Month
Rising Jeonse Prices in Prime Gangbuk Areas
Raemian Mapo Riverwell Up 200 Million Won in 2 Weeks

[Asia Economy Reporters Onyu Lim, Yuri Kim] The Seoul jeonse (long-term lease) market is in turmoil. As available jeonse properties have sharply decreased not only in Gangnam but also in the northern districts, jeonse prices are soaring. With the increase in property holding taxes, stricter owner-occupancy requirements for capital gains tax exemption, and landlords adjusting deposits ahead of the introduction of the rent ceiling system, Seoul’s jeonse prices have continued to rise for 55 consecutive weeks. In Daechi-dong, Gangnam-gu, known as the “number one district for private education,” a complex saw its jeonse listings plummet by 80% in just one month, while in the northern districts, large complexes with jeonse prices exceeding 1 billion KRW are appearing one after another.

Gangnam Reconstruction Complex 'Eunma Apartment' Listings Drop from 313 to 67 in One Month

According to real estate listing site Asil on the 23rd, the jeonse listings for Eunma Apartment, a representative reconstruction complex in Daechi-dong, Gangnam-gu, have decreased by 78.6%, from 313 listings a month ago to 67 currently. Although the complex has 4,424 households, only about 1.5% are available for jeonse transactions. Considering that many listings are duplicated across multiple real estate agencies, industry insiders believe the actual number of available units is even lower. Prices continue to rise as well. According to KB Real Estate, the upper limit jeonse price for a 76㎡ (exclusive area) apartment in this complex rose by 20 million KRW in one week, from 590 million KRW in the first week of this month to 610 million KRW in the second week. A representative from nearby A real estate agency said, “With the new two-year owner-occupancy requirement for reconstruction apartments and the increase in half-jeonse (deposit + monthly rent) conversions, jeonse supply has drastically decreased.”

The situation is similar at nearby Dongbu Centreville. Jeonse listings have halved from 70 a month ago to 37 currently. Being a newly built complex, the surge in jeonse prices is even more pronounced. A 121㎡ unit in this complex was traded for 2 billion KRW last month, but the current asking price has risen to 2.15 billion KRW. A 40-something office worker living in Daechi-dong, Mr. A, said, “My jeonse contract expires in October, but I haven’t found a unit that matches both the move-in timing and price yet. I moved here because of the school district, but I don’t know how much longer I can hold out.”

The jeonse shortage is also severe in Seocho and Songpa districts, also in Gangnam. Jeonse listings at Raemian Seocho Stage S in Seocho-dong, Seocho-gu, dropped by 47.6%, from 61 to 32 in one month, while Lake Palace in Jamsil-dong, Songpa-gu, decreased by 24.8%, from 113 to 83.

Jeonse Shortage Also Evident in Gangbuk... Raemian Mapo Riverwell 84㎡ Jeonse Asking Price Hits 1 Billion KRW

The jeonse shortage is appearing regardless of Gangnam or Gangbuk areas. In newly built large complexes in prime northern districts, jeonse prices for medium-sized apartments of 84㎡ have hit 1 billion KRW in several complexes. The asking price for an 84㎡ jeonse unit at Raemian Mapo Riverwell in Yonggang-dong, Mapo-gu, is 1 billion KRW. Considering that a similar unit was traded for 800 million KRW on the 7th, this represents a rapid 200 million KRW increase in about two weeks. An 84㎡ unit at Gongdeok 2 Samsung Raemian in Gongdeok-dong was recently leased for 650 million KRW, up 100 million KRW from the beginning of the year. Similarly, an 84㎡ unit at Seoul Forest 2nd Prugio in Geumho-dong, Seongdong-gu, was traded for 850 million KRW on the 10th, but current asking prices have all exceeded 1 billion KRW.

The decline in listings is also clear. Jeonse listings at Jugong 2 Complex in Sanggye-dong, Nowon-gu, dropped from 77 a month ago to 37 as of this date, a decrease of more than half. Jugong 11 Complex in Sanggye-dong also fell by 42.4%, from 53 to 30.

Half-Jeonse and Monthly Rent Conversions, Increased Owner Occupancy Lead to Disappearing Jeonse Listings

The market views the recent jeonse shortage as stemming from conversions to half-jeonse and monthly rent, as well as increased owner occupancy. As the government pushes for realistic public property prices and increased holding taxes, many landlords are converting jeonse contracts to half-jeonse or monthly rent to reduce tax burdens. Moreover, under the June 17 measures, those who purchase a home with a mortgage loan are required to occupy the property within two years. Additionally, owners of reconstruction apartments who fail to establish a union by this year must reside for two years to receive the right to move into the new apartment. All these regulations encourage owner occupancy.

According to the Korea Real Estate Board, Seoul apartment jeonse prices rose by 0.13% in the second week of this month (as of the 13th), marking the 55th consecutive week of increase. Gangdong-gu recorded the highest jeonse price increase rate at 0.3%, followed by Songpa-gu (0.26%), Gangnam-gu (0.24%), and Seocho-gu (0.21%), highlighting the upward trend in the four Gangnam districts. Seongdong-gu and Mapo-gu also rose by 0.19% and 0.15%, respectively, exceeding the Seoul average. Looking at the trend over the past year, the rise in jeonse prices is even more pronounced. According to Economy Man Lab, as of June, the average jeonse price per 3.3㎡ in Seoul apartments increased by 6.47%, from 17.517 million KRW to 18.651 million KRW. In particular, Gangnam-gu surged by 13.69%, from 27.697 million KRW to 31.489 million KRW.

Experts say that although the lease three laws caused a sharp short-term rise in jeonse prices, this phenomenon is expected to continue due to pending demand for new housing in the 3rd New Towns and conversions to monthly rent due to tax burdens. There are also concerns that if the jeonse-to-sale price ratio, currently hovering around 50%, rises, jeonse demand may shift to purchase demand, potentially driving house prices up again.

Oh Dae-yeol, head of research at Economy Man Lab, said, “The recent decline in Seoul’s jeonse-to-sale price ratio is not because jeonse prices have fallen, but because the increase in sale prices has outpaced the rise in jeonse prices. If jeonse prices continue to rise, people will need to prepare large sums of money and may have to move, which could expand housing instability for ordinary citizens.”

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