[Fact Check] Has the Proportion of Jeonse and Wolse Already Reversed in 2012, the 'Hot Potato'?

The Political Issue of 'Jeonse Extinction' Reemerges Periodically... Rapid 'Jeonse to Wolse' Transition Difficult Due to Many Gap Investments

[Asia Economy Reporter Ryu Jeong-min] The phrase 'jeonse extinction' is a slogan that resurfaces in political circles from time to time. Especially during real estate turmoil, it approaches the public as a 'language of fear.' The top priority in Korean assets is real estate, particularly apartments. Not only homeowners but also tenants consider apartments (jeonse deposits) as the largest portion of their assets.

According to the Korea Real Estate Board on the 4th, as of July this year, the 'median jeonse price' for apartments in Seoul is 435.14 million KRW. The median jeonse price for apartments in Seocho-gu reaches 775 million KRW. The instability of the jeonse market inevitably causes anxiety for tenants. There is concern whether the already unaffordable jeonse prices will rise further, or if 'empty jeonse' cases will flood the market due to price instability, causing tenants to lose their deposits.

Jeonse was the most common housing form for the middle-aged and older generations. When starting a new family through marriage, it was typical to first secure a jeonse house, gradually increase the deposit, and eventually own a home. However, with changes in population structure and housing types, the proportion of monthly rent has increased. Nowadays, young generations commonly live in one-room spaces paying a fixed monthly rent.

On the 30th, a widespread surge in jeonse prices and a shortage of jeonse properties have been observed mainly in Seoul due to real estate regulations such as the Three Lease Laws. This photo shows the Yongsan Railroad Maintenance Depot site (behind the Han River-side apartments) as seen from the 63 Building in Yeouido, Seoul. Photo by Mun Ho-nam munonam@

Currently, which has a higher proportion, jeonse or monthly rent? Is the possibility of jeonse extinction as some political circles claim real? Regarding this, Justice Party lawmaker Shim Sang-jung stated on Facebook on the 3rd that "the proportion of jeonse and monthly rent reversed as early as 2012."

According to the '2019 Housing Survey' announced by the Ministry of Land, Infrastructure and Transport on June 1, 2008, among tenant households, the jeonse ratio was 55.0%, and the monthly rent ratio was 45.0%, so jeonse had a higher proportion at that time. In 2010, the jeonse ratio was 50.3%, and the monthly rent ratio was 49.7%, becoming similar.

In 2012, the jeonse ratio was 49.5%, and the monthly rent ratio was 50.5%, reversing the relationship. As explained by lawmaker Shim, from 2012 onward, monthly rent has maintained a higher proportion than jeonse. The most recent data from 2019 shows monthly rent at 60.3% and jeonse at 39.7%.

Minister of Land, Infrastructure and Transport Kim Hyun-mi attended the 'Party-Government Consultative Meeting on Expanding Housing Supply to Stabilize the Real Estate Market' held at the National Assembly on the 4th and is seen talking with Cho Jung-sik, floor leader of the Democratic Party of Korea. Photo by Yoon Dong-ju doso7@

An interesting point is that the jeonse extinction debate also existed during the Park Geun-hye administration. Then-President Park Geun-hye said in a national address on January 13, 2016, "The jeonse market is going away anyway," and "There is no chance for interest rates to rise, so who would choose jeonse?" Although the president supported the jeonse extinction theory, the jeonse ratio remained around 40% from 2016 until last year.

Lawmaker Shim said, "In Seoul's jeonse market, many landlords hold properties through gap investment without sufficient funds, so it is doubtful that the conversion from jeonse to monthly rent will proceed rapidly." Even if landlords want to convert jeonse to monthly rent, suddenly preparing deposits worth hundreds of millions of won is not easy. Experts predict that contrary to some political claims of jeonse extinction, it will be difficult to eliminate jeonse demand.

Jang Jae-hyun, head of Real Today, analyzed, "Most landlords are likely to prefer jeonse," adding, "(If the landlord purchases a new) house under the condition of providing jeonse, it does not require a large sum of money, and they can raise the jeonse price by a certain amount annually."

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