To Switch from Jeonse to Sale in Seoul Apartments, You Need 500 Million Won
[Asia Economy Reporter Choi Dong-hyun] It has been revealed that tenants with jeonse (long-term lease) in Seoul apartments need an average of 500 million KRW in additional funds to purchase a home. While in 2015, having mid-100 million KRW was enough to switch from jeonse to purchase, the price gap has more than tripled in five years.
According to Real Estate 114 on the 27th, the difference between the average sale price and jeonse price of Seoul apartments this year was calculated at 517.57 million KRW. This means that switching from jeonse to purchase requires an average cost of over 500 million KRW.
In particular, the gap between sale prices and jeonse prices in Seoul was larger than in other regions. Sejong, which had the second largest gap, recorded 270.02 million KRW, about half of Seoul's level. Following were ▲Gyeonggi (150.45 million KRW) ▲Busan (128.72 million KRW) ▲Jeju (121.68 million KRW) ▲Daejeon (109.8 million KRW) ▲Daegu (103 million KRW) in order.
The gap between Seoul apartment sale prices and jeonse prices has been widening since 2015. This is a result of sale prices soaring compared to jeonse prices. The figures were ▲162.07 million KRW in 2015 ▲188.04 million KRW in 2016 ▲247.24 million KRW in 2017. In 2018, as housing prices rose sharply, the gap between sale and jeonse prices surpassed 400 million KRW, reaching 403.5 million KRW, and then exceeded 500 million KRW in 2020, just two years later.
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Experts predict that with the widening gap between sale and jeonse prices combined with loan regulations, it will become even more difficult for actual buyers to secure their own homes for the time being. Yoon Ji-hae, Senior Researcher at Real Estate 114, said, "Considering that Seoul is designated as a speculative overheated district where the loan-to-value ratio (LTV) is applied at 40%, the financial concerns of buyers trying to switch from jeonse to purchase are expected to deepen."
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