The Nationwide Increase in Jeonse Prices After the Lease Law Exceeds the Previous 7 Months' Growth

Rents Rose 2.50% from January to July... 2.72% Increase Since Lease Law
Jeonse Shortage Not Only in Seoul but Also in Capital Area and Metropolitan Cities
Rising Jeonse Rate Raises Gap Speculation Concerns... Sales Market Unstable

The property listings section is completely empty at a real estate office within a commercial complex of an apartment complex in Jamsil. (Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] Since the amendment of the Housing Lease Protection Act at the end of July, which implemented the right to request contract renewal and the cap on monthly rent increases, the nationwide apartment jeonse prices have risen more in the three and a half months following the law's enforcement than in the seven months prior to it this year. The jeonse shortage, which began in Seoul, has spread beyond the metropolitan area to provincial metropolitan cities nationwide, creating an atmosphere that threatens the housing stability of ordinary citizens.

According to the weekly apartment price trend time series data from the Korea Real Estate Board on the 16th, since the implementation of the cap on monthly rent increases and the right to request contract renewal at the end of July, nationwide apartment jeonse prices have risen by about 2.72% over approximately three and a half months. This figure is higher than the cumulative increase of 2.50% from the beginning of this year until July. The sharp rise in jeonse prices following the enforcement of the lease law is continuously confirmed by statistical data.

In Seoul, during the same period, apartment jeonse prices rose by 1.59%, approaching the cumulative increase of 1.79% over the previous seven months, and the difference with the sales price increase rate (0.23%) was nearly sevenfold. While sales prices saw weekly increases of only 0.01% to 0.02% due to price drops in Gangnam area reconstruction complexes, jeonse prices rapidly increased from '0.08% → 0.10% → 0.12% → 0.14%', widening the gap.

As this trend continues, concerns have been raised that the 'jeonse price ratio'?the ratio of jeonse price to sales price?may rise, potentially activating 'gap investment,' where buyers purchase homes with jeonse deposits.

In fact, according to the monthly KB Housing Price Trend data from KB Kookmin Bank's real estate platform LiveOn, Seoul apartment jeonse price ratios rose for two consecutive months: 53.3% in August, 53.6% in September, and 54.2% last month.

Although the Gangnam area, where sales prices are high, still has relatively low jeonse price ratios, districts with many mid- to low-priced complexes such as Gangbuk-gu (59.5%), Seongbuk-gu (60.3%), Eunpyeong-gu (60.1%), Gwanak-gu (59.0%), and Geumcheon-gu (59.6%) showed comparatively high ratios. As the jeonse price ratio increases, it becomes easier to buy and sell through gap investment, which raises the possibility of housing price instability.

Gap investment is concentrated in non-regulated areas such as Busan and Gimpo in Gyeonggi Province. According to 'Asil' (Apartment Real Transaction Price), a real estate big data company, as of this date, the regions with the highest number of gap investment transactions nationwide over the past three months were Busan Haeundae-gu (95 cases), Gyeonggi Gimpo (94), and Gyeonggi Paju (88). All are non-regulated areas and have recently seen noticeable price increases.

For example, in Centum Daerim, Banyeo-dong, Haeundae-gu, Busan, a 59㎡ unit was sold for 218 million KRW on the 21st of last month, while a jeonse contract was signed for 190 million KRW on the 6th, leaving a gap (sales price - jeonse price) of only 28 million KRW. The representative of A Real Estate Agency in Pungmu-dong, Gimpo City, said, "Many newlyweds or non-homeowners who used to live in Seoul inquire about gap investment," adding, "As jeonse prices rise, interest in sales has increased."

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