No·Do·Gang 84㎡ '850 million KRW'... This is the Jeonse price, not the sale price

Soaring Back to Prices from a Year Ago
Jeonse Refugees Gradually Pushed to Outskirts

[Asia Economy Reporters Lee Chun-hee and Moon Je-won] "850 million won." Just a year ago, this was the amount needed to purchase an 84㎡ (exclusive area) apartment in the so-called 'No-Do-Gang (Nowon, Dobong, Gangbuk districts)' area, a mid-priced apartment cluster in the northeastern part of Seoul. However, currently, this price has become the jeonse (long-term lease) price in this area.

Tenants who trusted the government's real estate policies now face not only the fading dream of owning a home due to soaring housing prices but also the risk of being pushed further to the outskirts even for jeonse living.

According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system and frontline real estate agencies on the 11th, an 84㎡ apartment in Geonyeong 3rd Complex, Junggye-dong, Nowon-gu, Seoul, was leased under a jeonse contract for 850 million won on the 8th of this month. Although this apartment was leased for 860 million won last May, that was a special transaction far from the normal market price, which was in the mid-500 million won range at the time.

In contrast, the recent transaction is part of a continuous price increase trend. Just less than two weeks after a jeonse contract was made for 820 million won on the 24th of last month, the price jumped by 30 million won. Nearby, an 84㎡ apartment in Cheonggu 3rd Complex was also leased for 800 million won last month, continuing the upward trend.

The sharp rise in jeonse prices for these apartments is due to concentrated educational demand, as they are located right next to the academy district near Eunhaeng Intersection in Junggye-dong, while jeonse listings have dried up due to the implementation of the Lease Renewal Request System and the Jeonse and Monthly Rent Cap System, known as the two lease laws. The representative of A Real Estate Agency in Junggye-dong said, "Jeonse prices are set by what landlords ask for," adding, "Both complexes had jeonse listings in the 700 million won range until last month, but now the starting price is basically 800 million won."

Notably, these jeonse prices are approaching last year's sale prices in the area. According to KB Kookmin Bank, the average sale price for an 84㎡ apartment in Geonyeong 3rd Complex was 855 million won in August last year. The prices are rising sharply, quickly catching up with sale prices.

Cheonggu 3rd and Geonyeong 3rd in Junggye-dong, Nowon-gu, Seoul (Photo by Kim Hyunjung)

This upward trend is also continuing in Gangbuk-gu and Dobong-gu areas. On the 4th of this month, an 84㎡ apartment in Raemian Tribera 2nd Complex, Mia-dong, Gangbuk-gu, was leased for 700 million won. This was just four days after setting a new jeonse record of 650 million won on the 30th of last month, marking a 50 million won increase. In Dobong-gu, an 84㎡ apartment in Bukhansan I-Park 5th Complex, Chang-dong, was leased for 650 million won on the 7th, also the highest jeonse price ever for this apartment.

According to the Korea Real Estate Board, as of the 7th of this month, apartment jeonse prices in Seoul rose by 0.14% compared to the previous week. A Korea Real Estate Board official stated, "While the shortage of listings relative to actual demand continues, prices have risen mainly in complexes with good residential conditions such as school districts or steady demand due to proximity to workplaces." By district, Nowon-gu rose 0.12%, Gangbuk-gu 0.11%, and Dobong-gu 0.09%, maintaining the upward trend.

Experts point out that this rise in jeonse prices is a side effect of government policies. Kwon Il, head of the research team at Real Estate Info, said, "Because properties that should be on the market are not coming out, jeonse listings are not being released," adding, "Due to tax issues and regulations, many landlords are living in their properties, and with the pre-sale price ceiling system setting low prices, jeonse demand to maintain a non-homeowner status for pre-sale purposes is increasing." Industry insiders also say that some jeonse demand is shifting to relatively cheaper multi-family and row houses because tenants cannot afford the expensive apartment jeonse prices.

There are also concerns that rising apartment sale prices in outer areas are fueling the jeonse shortage. According to the weekly apartment sale price index by the Korea Real Estate Board, as of the 7th, Nowon-gu's sale price rose 0.05% compared to the previous week, recording the highest increase among Seoul's 25 districts along with Gwanak-gu and Gangnam-gu. Gangbuk-gu rose 0.03%, and Dobong-gu 0.01%.

The upward trend is even more pronounced when looking at the cumulative figures for this year. Among the top five districts with the highest cumulative apartment sale price increases in Seoul this year are the No-Do-Gang area along with the so-called 'Geum-Gwan-Gu (Geumcheon, Gwanak, Guro districts)' outer areas. Guro-gu ranked first with a 2.53% increase, followed by Gangbuk-gu (1.97%), Nowon-gu (1.92%), Gwanak-gu (1.78%), and Dobong-gu (1.64%).

In fact, Cheonggu 3rd Complex in Junggye-dong broke the 1 billion won mark for the first time among 84㎡ apartments in the No-Do-Gang area by being traded for 1.03 billion won in June. Geonyeong 3rd Complex also joined the 1 billion won club the following month with a transaction at 1.07 billion won. The recent actual transaction prices for Cheonggu 3rd and Geonyeong 3rd complexes soared to 1.29 billion won and 1.15 billion won respectively last month.

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