Unrelenting Jeonse Crisis... September Sees Rising Jeonse Price Increase Rate in Seoul Metropolitan Area Housing

Capital Region Jeonse Prices Rise at Highest Rate in 5 Years 3 Months
Lease Law and Fall Moving Season Overlap Increasing Jeonse Demand
Sale Prices Also Continue to Rise... Housing Instability Worsens

Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Jiwon] The housing rental market in the Seoul metropolitan area shows little sign of easing. In September, the upward curve of jeonse prices in Incheon and Gyeonggi regions steepened, spreading the jeonse shortage triggered by the two lease laws?the Jeonse and Monthly Rent Cap System and the Lease Renewal Request Right System?across the entire metropolitan area. Although the rise in sale prices has narrowed, it still continues to increase.

According to the nationwide housing price trend announced by the Korea Real Estate Board on the 5th, the jeonse prices in the metropolitan area rose by 0.65% in September, expanding the increase from the previous month (0.54%). This is the highest increase rate in 5 years and 3 months since June 2015 (0.72%).

The metropolitan area's jeonse price increase rate fell to 0.15% in May but has been expanding for four consecutive months since then. This is interpreted as a result of a sharp decrease in jeonse listings due to the implementation of the two lease laws on July 31 and the overlapping demand of the autumn moving season.

Last month's jeonse price increase was more pronounced in Incheon and Gyeonggi than in Seoul. During this period, Seoul's increase slightly decreased from 0.43% to 0.41%, but Incheon rose from 0.17% to 0.52%. Gyeonggi also expanded from 0.71% to 0.85% during the same period.

Regarding apartment jeonse prices, Seoul's increase rate slightly decreased from 0.65% to 0.60% in one month, while Incheon rose from 0.26% to 0.75%, and Gyeonggi-do increased from 1.03% to 1.20%.

As jeonse prices continue to rise, apartments in Seoul with jeonse prices below 400 million KRW have decreased to historically low levels. According to data submitted by the Korea Real Estate Board to Kim Sang-hoon, a member of the People Power Party, apartments with jeonse prices below 400 million KRW accounted for 59.0% of the total supply in May 2017, when the Moon Jae-in administration began, but decreased to 46.0% in August this year based on the board's market prices.

Until December last year, apartments with jeonse prices below 400 million KRW maintained more than half at 51.1%, but in January this year, it recorded 49.8%, falling below 50% for the first time. The proportion has continued to decline even after the implementation of the two lease laws.

On the other hand, during this period, apartments in Seoul with jeonse prices exceeding 600 million KRW increased from 16.2% to 24.0%, and those exceeding 900 million KRW rose from 5.0% to 9.0%.

The monthly rent market is showing even more instability. The increase rate expanded in most regions, including the metropolitan area (0.13%→0.17%), Seoul (0.09%→0.10%), provinces (0.08%→0.09%), and the five major metropolitan cities (0.09%→0.10%). It appears that prices rose as landlords converted existing jeonse contracts into semi-monthly rent contracts amid an absolute shortage of listings.

Housing sale prices also continued to rise, although the increase rate narrowed. The housing sale price increase rate in September was 0.27% in Seoul and 0.43% in the metropolitan area, lower than the previous month’s 0.42% in Seoul and 0.52% in the metropolitan area. In Seoul, while the price rise in the Gangnam area, including Gangnam, Seocho, and Songpa districts, slowed, the increase was relatively larger in outer areas such as Jungnang, Seongbuk, and Nowon districts.

An industry official said, "Although the increase in sale prices is slowing in the short term due to government regulations, if jeonse prices rise sharply again, it could stimulate the sale market. Overall, the housing market situation remains unstable."

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