Lost Trust Over Failure to Control Housing Prices... Public Sentiment Boils Amid Sale and Jeonse Instability

Lease Law → Jeonse Shortage → Rising Sale Prices
Balloon Effect in Gimpo and Busan... Increased Housing Instability
Blue House Petitions and Communities Overflow with Government Criticism

Information on sales, jeonse, and monthly rent posted at a real estate agency in Seoul (Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The new lease law and low interest rates have caused a shortage of jeonse (long-term lease deposits), which is now leading to instability in the sales market. The government is reviewing measures such as expanding regulated areas and resolving the jeonse shortage to prevent further rapid increases in sales and jeonse prices, but delays are only increasing the suffering of ordinary citizens.

Meanwhile, public opinion on the government's real estate policies is worsening. The Korea Association of Realtors refused the commendation given annually by the Minister of Land, Infrastructure and Transport on Real Estate Industry Day for the first time this year, and criticism continues to pour in daily on the Blue House's public petition board and real estate online communities.

From Jeonse Shortage to Sales Market Instability... Ordinary Citizens Suffering

According to the weekly apartment price trend time series data from the Korea Real Estate Board on the 14th, the nationwide apartment sales supply-demand index recorded 105 as of the 9th, the highest level in five years since November 2015. The sales supply-demand index is expressed as a number between 0 and 200, with values above 100 indicating demand exceeds housing supply.

In Seoul, the sales supply-demand index remains below 100 but has steadily risen over the past four weeks from 96.0 → 97.6 → 98.0 → 98.7, showing a slight revival in buying sentiment. The metropolitan area also increased from 106.0 to 106.3 this week, and the regional sales supply-demand index, which had been below 100 for nearly five years since December 2015, rose to 103.5.

The nationwide strengthening of apartment buying demand is due to the jeonse shortage. Since the implementation of the rent ceiling and contract renewal request system at the end of July, jeonse prices have soared, spreading the perception that "it's better to buy an apartment." The problem is that this buying demand is concentrated in mid- to low-priced complexes, further destabilizing the housing environment for ordinary citizens. Experts explain that in outer areas such as Nowon-gu and Jungnang-gu in Seoul, there is a significant shift from jeonse demand to sales.

The 'balloon effect' caused by regulatory side effects is also spreading. As most areas in Seoul and the metropolitan area were designated as regulated zones, speculative capital is moving to some non-regulated areas such as Busan and Gimpo.

In Busan, apartment prices have risen over the past three weeks from 0.30% → 0.37% → 0.56%, showing an increasing rate of growth. Gimpo, almost the only non-regulated area among major metropolitan regions, has seen continuous weekly price increases since June 8, with the recent two-week rise approaching 4%, indicating a steep upward trend.

Minister of Land, Infrastructure and Transport Kim Hyun-mi recently stated, "We have confirmed through statistics that speculative capital is moving to provincial metropolitan cities to avoid regulations and are closely monitoring the situation," but concerns arise that damage to actual buyers is inevitable given the already significant price increases. In particular, the market criticizes the government's approach of responding with 'pinpoint regulations' each time prices rise in specific areas, pointing out that measures are only taken after instability occurs in markets like Gimpo and Busan.

Realtors Who Refused the 'Minister of Land Award'... Flood of Government Criticism Petitions

Minister of Land, Infrastructure and Transport Kim Hyun-mi / Photo by Yoon Dong-ju doso7@

As regulations continue to increase market confusion and both jeonse and sales prices rebound, criticism of the government is intensifying.

The Korea Association of Realtors decided not to accept the commendation from the Minister of Land, Infrastructure and Transport, which they have received annually on November 11, Real Estate Industry Day. Since the establishment of Real Estate Industry Day in 2016, this is the first time the association has refused the minister's commendation.

The intention is to reject the award from Minister Kim, who caused market confusion due to policy failures and triggered numerous conflicts between landlords and tenants. Although some suggested that the association did not nominate a candidate due to lack of time, a key association official said, "The primary reason for rejecting the award was the judgment that we could not accept an award given by Minister Kim Hyun-mi."

Minister Kim recently added fuel to the fire by stating that she could buy an apartment in Ilsan, Gyeonggi-do, where she lives, for 500 million won. At the National Assembly Budget and Accounts Committee meeting on the 10th, in response to opposition lawmakers' criticism that the Didimdol loan limit is low compared to expensive metropolitan area apartment prices, she said, "There are apartments under 500 million won in the metropolitan area. I can buy a place like my home with a Didimdol loan."

Residents of Minister Kim's apartment issued a statement opposing this, saying, "How can you be the Minister of Land without knowing your own home's market price? You hurt the feelings of the residents." In fact, the apartment size in question was sold for 645 million won on the 2nd, proving Minister Kim's statement to be inaccurate.

One petitioner said, "It has become a world where not having money is a crime. People who have lived honestly but have not been able to buy a home are just stomping their feet in this reality," adding, "The government keeps saying it will soon get better. Can't you see the suffering of ordinary citizens?"

Another petitioner said, "Tears of blood flow from the eyes of the homeless people," and asked, "What excuse will the President offer for the criticism that the housing instability of the people is the result of this administration's planned and executed housing price policies?"

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