"Only 6 Units in Helio City"... Tenants Frustrated by Jeonse Shortage

'Jeonse Crisis' Continues Regardless of Gangnam or Gangbuk
No Listings, Prices Soar... 70 Million Won Increase in Half a Month
"Sharp Rise in Jeonse Prices May Also Trigger Land Prices"

Near Helio City, Garak-dong, Songpa-gu, Seoul Photo by Yonhap News

[Asia Economy Reporter Onyu Lim] #Helio City in Garak-dong, Songpa-gu, Seoul, the largest apartment complex in Seoul. Among the total 9,510 households, there are only 6 rental listings posted on internet real estate portals. A representative from real estate agency A near Helio City said, "Since the revision of the Lease Protection Act, no tenants have voluntarily moved out, and everyone is settling in to live for another two years, so rental listings have completely dried up." With no listings available, prices are rising as landlords demand. For example, the rent for an 84.96㎡ (exclusive area) apartment was traded at 1.07 billion KRW on the 26th of last month, which is 70 million KRW higher than the previous transaction on August 11.

As the 'Jeonse crisis' in the metropolitan area continues, tenants who need to find a new rental home are increasingly worried. Tenants who can exercise the right to renew their lease under the new Lease Protection Act have less to worry about for the next two years, but those who must move due to landlords’ actual residence or other reasons are anxious amid the shortage of rental listings and soaring rent prices.

According to real estate big data company Asil on the 11th, the current number of Jeonse listings in Seoul is 9,395, which is a decrease of over 78% compared to just before the July 10 measures (43,354 listings). Especially since the end of July when the new Lease Protection Act was implemented, the demand for exercising the right to renew leases and staying in existing rental homes for two more years has greatly increased, causing rental listings to drop significantly compared to previous years, intensifying the Jeonse shortage. With supply far below demand, prices are rising. A real estate industry official pointed out, "Due to the implementation of the rent cap system for Jeonse and monthly rent, landlords can only raise deposits by 5% over two years, so they are trying to raise the deposit equivalent to four years’ increase in advance, making recent Jeonse prices literally 'whatever the landlord asks for.'"

In fact, in Mapo-gu Ahyeon-dong’s Mapo Raemian Prugio, which has 3,885 households, there are only 21 rental listings. The deposit for a 59.96㎡ unit has risen from 550 million to 650 million KRW in August to now 750 million KRW, and the Jeonse price for an 84㎡ unit jumped from 800 to 850 million KRW to 900 million KRW within 1 to 2 months. The current asking price for an 84㎡ unit has risen to 950 million KRW.

Accordingly, record-high prices are being renewed across Gangnam and Gangbuk areas. In Dogok-dong, Gangnam-gu, Dogok Rexle 85㎡ was leased at a deposit of 1.55 billion KRW on the 28th of last month, marking the highest price ever, and Raemian Daechi Palace 91.93㎡ in Daechi-dong renewed its record with a deposit of 1.73 billion KRW on the 29th of last month.

In Nowon-gu, Hagye 1 Cheonggu 84.6㎡ was leased at a deposit of 500 million KRW on the 11th of last month, surpassing 500 million KRW for the first time, and Boram 2 Complex 79.25㎡ in Sanggye-dong signed a lease contract at 400 million KRW (10th floor) on the 26th of last month, breaking the 400 million KRW mark. In Dongjak-gu, the 28-year-old Geukdong Apartment 84.32㎡ was leased at a deposit of 530 million KRW (15th floor) on the 23rd of last month, setting a new record.

There are also concerns that the continuous rise in Jeonse prices may not only support the stabilized land prices but also trigger house price increases. Ahn Myung-sook, head of the Real Estate Investment Support Center at Woori Bank, said, "Currently, house prices in the metropolitan area are in a wait-and-see mode, but there is still a possibility that people in their 30s, who have low points and find it difficult to win housing subscriptions, or tenants exhausted by the rapid rise in Jeonse prices, will turn to buying instead. The Jeonse instability may continue for one to two years, which could stimulate the sales market."

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