73% of Metropolitan Area Apartments Moving In Q4 Have 'Jeonse Price > Sale Price'

Comprehensive Survey of 23 Metropolitan Area Complexes with Over 500 Households
17 Complexes Have Jeonse Prices Higher Than Sale Prices
Jeonse Price Surpasses Sale Price from Seoul Spreading Across the Metropolitan Area
"Next Year's Housing Supply Halved... Concerns Over Worsening Imbalance in Jeonse Market"

Apartment view in Seocho-gu, Seoul / Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Onyu Lim] In the fourth quarter, more than 70% of large apartment complexes in the Seoul metropolitan area have seen their jeonse prices already surpass the sale prices. Buyers who signed pre-sale contracts can recover their entire investment simply by renting out the units. Industry experts attribute this to the combined effects of the 'jeonse crisis' that intensified after the implementation of the new lease protection law and the government's control over sale prices through the Housing and Urban Guarantee Corporation (HUG).

Comprehensive survey of 23 complexes with over 500 units moving in during Q4... 17 out of 23 complexes have jeonse prices > sale prices

On the 16th, Asia Economy compared the jeonse prices and sale prices of 84㎡ (exclusive area) apartments in 23 complexes with 500 or more units moving in (or scheduled to move in) from October to the end of the year across the Seoul metropolitan area including Seoul, Gyeonggi, and Incheon. The results showed that 17 complexes, accounting for 73%, had jeonse prices higher than the sale prices. In the survey, jeonse prices were compared using the median market price, while sale prices were compared using the highest price.

In particular, in 10 complexes, even the cheapest jeonse listings have market prices already exceeding the sale prices and are priced even higher. In Seoul, for example, the 84㎡ units at Hillstate Classian in Shingil New Town, Yeongdeungpo-gu, had a highest sale price of 729.9 million KRW at the time of general sale, but the current cheapest jeonse listing is priced at 730 million KRW. Similarly, in Sangye-dong, Nowon-gu, the lowest jeonse listing price for the same area exceeded the sale price. In the Gyeonggi area, this phenomenon was observed in ▲ Hwaseong Dongtan 2 District A84 Block ▲ Gwangmyeong Gwangmyeong Eco Xi Weave ▲ Hanam Hanam Powell City ▲ Ansan e-Pyeonhansesang Seonbu Plaza ▲ Goyang Jichuk Jungheung S-Class ▲ Siheung Eun-gye District S4 Block. In Incheon, the lowest jeonse prices for 84㎡ units at Michuhol-gu Incheon The Sharp Sky Tower 8-5 Block and Bupyeong-gu Bupyeong Kolon Haneulchae also surpassed the sale prices.

Regions with large jeonse-sale price gaps include Gwangmyeong and Hanam... "Jeonse crisis originating in Seoul spreading to Gyeonggi"

Specifically, at Gwangmyeong Eco Xi Weave, the cheapest jeonse listing was priced at 600 million KRW, which is 46 million KRW higher than the sale price of 554 million KRW. The most expensive jeonse listing was priced at 750 million KRW, about 200 million KRW higher than the sale price. At Hanam Powell City, the lowest jeonse price was also found to be 28 million KRW higher than the sale price. A representative from Hanam A real estate agency explained, "There is a jeonse listing with a deposit of 500 million KRW, but the landlord attached an abnormal condition of a contract term less than one year," adding, "Excluding this listing, the minimum jeonse price is 600 million KRW."

Experts believe that after the implementation of the new lease law at the end of July, including the rent ceiling and contract renewal rights, the shortage of jeonse listings has worsened, causing the jeonse-sale price reversal phenomenon centered in Seoul to spread to Gyeonggi and Incheon.

25,000 units scheduled to move in Seoul next year... concerns over worsening jeonse crisis in the metropolitan area

Concerns are rising that the Seoul-originated jeonse crisis in the metropolitan area will worsen as the number of units moving in Seoul sharply decreases next year. According to Real Estate 114, the number of apartment units scheduled to move in Seoul next year is 25,120, about half of this year's 48,719 units. Jang Jaehyun, head of Real Today, said, "Due to the implementation of the lease protection law and the '2-year actual residence' requirement for capital gains tax exemption, the supply of jeonse in the metropolitan area is far below demand," adding, "The effect of moving into large complexes to get cheap jeonse is a thing of the past."

Some analysts argue that the combination of the private land sale price ceiling and the rapid rise in jeonse prices has effectively reduced the investment risk in pre-sale rights to 'zero.' Although the government has effectively classified short-term pre-sale rights investment as speculation, the lease law and sale price controls have instead encouraged investment. A real estate consulting industry official said, "The key to investing in pre-sale rights is to cover the gap between sale prices and jeonse prices, and with the rise in jeonse prices, it has become possible to hold pre-sale rights stably."

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