Aftermath of New Lease Law... Seoul's Jeonse Over 1 Billion Won Surges 30% in One Year

5,814 Cases This Year... About 1,300 More Than Last Year's 4,501
Songpa-gu Up 81%... Highest Growth Rate in Seoul Area
Mayongseong and Other Non-Gangnam Areas Also See Increase in High-Priced Jeonse Under 85㎡
"Low-Income Jeonse Nearly Depleted... Market Faces Supply Shortage"

Property listing posted at a real estate office in Songpa-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporters Onyu Lim, Hyunjung Kim] The aftershocks of the new Housing Lease Protection Act (Lease Act) are intensifying. In Seoul, the number of high-priced apartment jeonse (long-term lease) transactions exceeding 1 billion KRW has increased by nearly 30% in one year. In particular, in Songpa-gu, jeonse transactions over 1 billion KRW surged by more than 80% compared to last year.

On the 22nd, Asia Economy analyzed the Ministry of Land, Infrastructure and Transport's Real Transaction Price Disclosure System and found that as of this date, there have been 5,814 apartment jeonse transactions over 1 billion KRW in Seoul. This is a 29% increase from 4,501 transactions last year. Considering the 30-day reporting deadline for actual transactions, the growth rate of transactions over 1 billion KRW is expected to rise further.

Jeonse transactions over 1 billion KRW were concentrated in the three Gangnam districts?Gangnam, Seocho, and Songpa?accounting for 4,777 cases, or 82% of the total. By district, there were ▲Gangnam-gu 2,160 cases ▲Seocho-gu 1,752 cases ▲Songpa-gu 865 cases. The steepest increase was seen in Songpa-gu. Although Songpa-gu had relatively lower jeonse prices among the three Gangnam districts, the number of jeonse transactions over 1 billion KRW rose from 478 last year to 865 this year, an 81% increase. Especially in the Jamsil-dong area, the so-called 'El-Ri-Te (Els, Residents, Tridgium)', high-priced jeonse transactions exceeding 1 billion KRW nearly tripled from 158 cases last year to 437 cases this year.

Notably, high-priced jeonse transactions have also sharply increased outside the Gangnam area, with a growing proportion of small to medium-sized units. Indeed, districts such as ▲Yongsan-gu (169 cases → 247 cases) ▲Yangcheon-gu (103 cases → 171 cases) ▲Seongdong-gu (117 cases → 168 cases) ▲Mapo-gu (100 cases → 148 cases) showed clear increases in high-value jeonse transactions. Jeonse transactions for small to medium-sized apartments under 85㎡ with prices over 1 billion KRW nearly doubled from 1,050 cases last year to 2,057 cases this year.

Experts cite the direct causes of this sharp rise in jeonse prices as the implementation of the new Lease Act, including the right to request contract renewal and the cap on jeonse and monthly rent increases. Additionally, the non-taxation of capital gains for single-homeowners and the strengthening of mandatory residence requirements for reconstruction association members are also pointed out as factors causing a shortage of jeonse listings and driving up prices. Ham Young-jin, head of the Zigbang Big Data Lab, said, "Demand from people remaining as non-homeowners to apply for apartment subscriptions is expected to continue for the time being, which could worsen the imbalance in jeonse supply and demand."

However, the government continues to repeat positive market forecasts. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated at the 12th Real Estate Market Inspection Meeting held at the Government Seoul Office that "Although the jeonse market has been affected by existing instability factors such as increases in households and family units, the rate of increase has somewhat slowed since December due to a reduction in moving demand, and jeonse listings are accumulating." He also presented a supply plan of 460,000 households next year, including 36,000 units from the November 19 supply measures, adding, "The supply of move-in units exceeding the average level (the nationwide 10-year average of 457,000 households) will help stabilize the market."

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