Sharp Rise in Seoul Jeonse Prices Due to 'Imdaecha 3 Laws'... Largest Increase in 7 Months

Korea Real Estate Board Weekly Apartment Price Trends for 1st Week of August
Jeonse Listings Disappear, Deposit Prices Surge... Housing Instability
Impact of Lease 3 Laws... Rent Price Increase Rate Same as Previous Week

Reconstruction complex of Miseong Clover and Jinju Apartments in Sincheon-dong as seen from Lotte World Tower, Songpa-gu, Seoul / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Jiwon] With the implementation of the Lease Renewal Request System and the Rent Increase Cap System under the Lease Protection Act, the jeonse prices of apartments in Seoul are soaring. Since landlords will no longer be able to raise the deposit by more than 5% when renewing lease contracts in the future, it is interpreted that they are raising the jeonse deposit as much as possible during new contracts.

According to the "Weekly Apartment Price Trend for the First Week of August" announced by the Korea Real Estate Board on the 6th, as of the 3rd, the jeonse prices of apartments in Seoul rose by 0.17% compared to the previous week. This week's increase rate in Seoul's jeonse prices is the highest in seven months since December 30 last year (0.19%) on a weekly basis.

With stricter occupancy requirements and continued low interest rates, the overall supply of jeonse properties has decreased, leading to higher deposits. In particular, the passage of the three Lease Protection Acts has had a significant impact on the rise in jeonse prices. Accordingly, Seoul's jeonse prices have risen for 58 consecutive weeks, and the rate of increase has grown over the past three weeks from 0.12% to 0.14% and then to 0.17%.

The rise was especially pronounced in the Gangnam 4 districts (Gangnam, Seocho, Songpa, and Gangdong), where high-priced jeonse properties are common. Gangdong-gu (0.31%) recorded the highest jeonse price increase in Seoul for the second consecutive week (last week 0.28%), and Gangnam-gu and Songpa-gu, which had increases of 0.24% and 0.22% last week, respectively, also saw their increases widen to 0.30% this week. Seocho-gu's jeonse prices also jumped from 0.18% last week to 0.28% this week.

In reality, it is difficult to find jeonse listings in places like Eunma Apartments in Daechi-dong, Gangnam-gu. Following the government's June 17 measures, which require reconstruction association members to reside for two years to receive pre-sale rights, it is known that cases of landlords moving in themselves or registering their residence but leaving the house vacant have increased.

Outside the Gangnam 4 districts, jeonse price increases were also significant in Dongjak-gu (0.27%), Seongdong-gu (0.23%), and Mapo-gu (0.20%). Dongjak-gu's rise was mainly in Heukseok and Noryangjin-dong, while Seongdong-gu saw significant increases in areas with station access and school demand such as Haengdang and Hawangsimni-dong. Seongbuk-gu (0.14%), Gwangjin-gu (0.13%), and Dongdaemun-gu (0.10%) also showed upward trends. Among the 25 districts in Seoul, there was not a single district where jeonse prices fell.

In Gyeonggi Province, jeonse prices rose by 0.29% compared to the previous week. This is also the largest increase in five years and four months since April 20, 2015 (0.35%). The increases were significant in Suwon-si Gwonseon-gu (0.66%), Yongin-si Giheung-gu (0.64%), and Guri-si (0.62%). In Incheon (0.05%), prices rose in Bupyeong-gu (0.17%) and Gyeyang-gu (0.08%), but fell in Yeonsu-gu (-0.07%) due to the influx of new housing in Songdo New Town.

Meanwhile, apartment sale prices in Seoul rose by 0.04% compared to the previous week, the same rate as last week. The Korea Real Estate Board analyzed, "With the passage of the July 10 measures-related legislation through the National Assembly and the smooth progress of related procedures, the sales market is showing signs of stabilization."

All Gangnam 4 districts rose by 0.02%, the same rate as last week, and Dongdaemun-gu (0.05%), Jungnang-gu (0.05%), Gangbuk-gu (0.05%), Dobong-gu (0.04%), and Nowon-gu (0.04%) also increased.

Especially, Sejong City saw apartment prices surge by 2.77% due to discussions about relocating the administrative capital, maintaining the highest increase nationwide following last week's 2.95%. Apartment prices in Sejong City have soared by 28.4% this year, which is overwhelming compared to other cities and provinces. Jeonse prices in Sejong City also rose by 2.41%, increasing the rate of rise from last week's 2.17%.

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