Change in Jeonse Price Statistics Method, Diluting Soaring Market Price Statistics?

[Asia Economy Reporter Yoo In-ho] The government officially announced its plan to change the method of compiling jeonse price statistics at the 'Real Estate Market Inspection Meeting of Related Ministers' held on the 19th, sparking controversy over 'statistical massage.'

Since the implementation of the Jeonse and Monthly Rent Cap System and the Contract Renewal Request Right System, instead of stabilizing jeonse prices, the government statistics show an increased rise in new jeonse and monthly rent prices, raising concerns that there may be an intention to artificially lower the rate of increase.

According to the Ministry of Land, Infrastructure and Transport and the Korea Real Estate Board on the 19th, the government is considering changing the current method of reflecting only new transactions in jeonse price statistics to include prices from contract renewals as well.

The Korea Real Estate Board, which currently handles jeonse price statistics, publishes weekly apartment jeonse price statistics using information related to confirmed dates that tenants apply for to secure their jeonse deposits. Since confirmed dates are generally obtained only at the time of new jeonse contracts, contract renewals are not reflected in the statistics.

A Ministry of Land official said, "Since jeonse statistics target only tenant households that have obtained confirmed dates, and it is customary that tenant households renewing contracts often do not obtain separate confirmed dates, they are not reflected in the statistics. The current method has some limitations in accurately reflecting the short-term stabilization effect of jeonse prices due to the Three Lease Laws."

In fact, jeonse prices are rising significantly in the statistics. Even before and after the implementation of the Three Lease Laws, landlords tend to raise deposits during new contracts because the Jeonse and Monthly Rent Cap System does not apply to new contracts.

According to the Korea Real Estate Board statistics, the weekly jeonse price increase rate for apartments nationwide remained around 0.04-0.05% in April and May but expanded from the end of June, soaring to 0.20% in the first week of this month.

However, in the market, there are criticisms that the government might suddenly change the decades-old statistical compilation method to dilute the side effects of the Jeonse and Monthly Rent Cap System and the Contract Renewal Request Right System. This is because the rent increase is limited to 5% at contract renewal under the Jeonse and Monthly Rent Cap System, so prices significantly lower than the surrounding market prices are included in the statistics.

Moreover, experts agree that it is not easy to devise a way to correct the statistics as there are currently no accurate jeonse and monthly rent statistics. As of May this year, it is estimated that 7.31 million households nationwide are rented out, but only about 2.05 million households, or 28% of the total, have confirmed dates allowing verification of actual jeonse transaction information.

Jang Jae-hyun, Head of Research at RealToday, pointed out, "Even if the government includes existing renewal contracts in the new jeonse statistics, it will be difficult to accurately grasp market prices before the implementation of the Jeonse and Monthly Rent Reporting System in June next year, due to the prevalence of half-jeonse contracts."

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