Seoul Jeonse Prices Rise Sharply... Maemat Prices in Tug-of-War for 6 Weeks

Korea Appraisal Board Weekly Apartment Price Trends for 4th Week of September
Seoul Apartment Sale Prices Up 0.01% for 6 Consecutive Weeks
Jeonse Prices Rise from 0.08% to 0.09% Increasing Rate
Bold Listings with Deposit Raised by Hundreds of Millions Due to Jeonse Shortage

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] Seoul apartment sale prices have maintained a 0.01% increase rate for six consecutive weeks. Although the rise in sale prices has somewhat eased due to successive government policies, a tense tug-of-war between sellers and buyers continues, creating an atmosphere where prices do not easily turn negative.

Since the implementation of the Jeonse rent cap system and the contract renewal request system, Seoul apartment Jeonse prices have risen significantly, increasing by 0.09% this week, expanding the rate of increase compared to the previous week. The shortage of Jeonse listings has intensified the Jeonse crisis and concerns over 'empty Jeonse' are growing.

According to the weekly apartment price trend for the fourth week of September released by the Korea Real Estate Board on the 2nd, as of the 28th, Seoul apartment sale prices rose by 0.01%, maintaining the same rate of increase as the previous week.

In Seoul, the 0.01% increase rate has been maintained for six consecutive weeks through this week. Although buying demand has weakened due to the July 10 measures and August 4 supply measures, the upward trend continues mainly in some Gangnam complexes and mid-to-low priced complexes in the outskirts.

Looking at information posted on the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, there are increasing urgent sale properties priced several tens of millions of won below market value in various Seoul apartment complexes, but many record-high transactions are also taking place in some new and small-to-medium-sized complexes.

Due to the increased burden of property tax, Seocho and Songpa districts (0.00%) maintained a flat trend this week, but Gangnam and Gangdong districts (0.01%) continued to show an upward trend mainly in new complexes.

In addition, Jongno and Jung districts showed a flat trend, while most autonomous districts such as Seongdong, Gwangjin, Dongdaemun, Seongbuk, Gangbuk, Dobong, Mapo, Gangseo, Guro, and Yeongdeungpo recorded a 0.01% increase rate.

In Incheon, apartment sale price increase rates expanded from 0.05% last week to 0.06% this week. In Incheon, the increase rates have gradually risen from 0.02% on August 10, 0.03% on August 17, 0.04% on September 7, to 0.05% on September 21.

Gyeonggi Province has shown a 0.10% increase rate for three consecutive weeks. Sejong, where prices rose sharply due to the administrative capital relocation issue, maintained a high increase rate of 0.42%, but the rate of increase has narrowed for nine consecutive weeks.

View of Gangbuk-gu and the surrounding apartment complexes from the Buk Seoul Dream Forest Observatory in Gangbuk-gu, Seoul (Photo by Yonhap News)

The Jeonse market still shows unstable conditions.

The Seoul apartment Jeonse price increase rate slightly expanded from 0.08% last week to 0.09% this week. This marks 66 consecutive weeks of rising prices since July last year. The low interest rate trend, implementation of the two lease laws, and the autumn moving season have continued to cause a shortage of Jeonse listings.

The rise in Jeonse prices was particularly noticeable in the Gangnam area, where high-priced complexes are concentrated. All four Gangnam districts?Gangdong (0.13%→0.14%), Songpa (0.12%→0.13%), Gangnam (0.09%→0.12%), and Seocho (0.07%→0.09%)?saw Jeonse prices increase compared to the previous week.

In addition, Jeonse prices in Dongjak, Nowon, Seongdong, and Jongno districts rose compared to the previous week, and other autonomous districts also showed relatively large increases.

Recently, there has been an increase in 'bold listings' taking advantage of the Jeonse shortage. The 84.95㎡ (exclusive area) unit in Helio City, Garak-dong, Songpa-gu, which was leased for 900 million to 1 billion won until July, now has a deposit asking price of up to 1.4 billion won.

The 110.66㎡ unit in Helio City saw its asking price rise by 500 million won in just over two months, and the 84㎡ unit in Mapo Xi 3rd Complex, Yeomni-dong, Mapo-gu, also saw its highest asking price jump by about 250 million won within a month.

In a situation where Jeonse properties are scarce, landlords are increasingly raising asking prices arbitrarily. Normally, contracts would not have been concluded, but tenants urgently searching for Jeonse homes reluctantly accept these prices, causing actual transaction prices to rise significantly.

Therefore, the industry is increasingly concerned that the number of 'empty houses'?where Jeonse prices approach or exceed sale prices?may increase. Empty houses pose a risk because if housing prices stabilize later, landlords may not be able to return the Jeonse deposit, so tenants need to be cautious.

Meanwhile, Sejong, which saw a sharp rise in Jeonse prices by 2.15% as of the 14th of last month, rose by 1.43% this week, showing a slight decrease in the rate of increase. Although the shortage of Jeonse listings continues, overall fatigue from the rapid price surge is accumulating, leading to a smaller increase.

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