Paying full salary is inevitable... 4 million won monthly rents surge in Daechi and Dogok-dong

Homeowners in Tower Palace Lower Deposits and Raise Monthly Rent
84㎡ Jeonse Prices Reach 2 Billion Won Amid Housing Shortage
Property Tax and Lease Renewal Burden Passed on to Tenants

A rental flyer showing a monthly rent of 4 million won is posted at a real estate agency office in Daechi-dong, Gangnam, Seoul.

[Asia Economy Reporter Song Seung-seop] Last weekend, six monthly rental listings were posted on the exterior wall of a real estate agency in Dogok-dong, Gangnam-gu, Seoul. The monthly rent for the smallest apartment, around 24 pyeong, reached 4 million KRW. In contrast, there were no jeonse (lump-sum deposit lease) listings in sight. High-priced monthly rental apartments exceeding 4 million KRW are flooding the market, especially in the Gangnam area of Seoul. This amount is more than 500,000 KRW higher than the average monthly wage per worker (3.49 million KRW as of 2019). Due to the impact of the two lease laws?the right to request contract renewal and the rent ceiling system?jeonse vacancies are rapidly decreasing, being replaced by high monthly rents with lower deposits.

According to frontline real estate agencies on the 28th, apartments around 84㎡ (exclusive area) in Tower Palace 1 and 2 in Dogok-dong, Gangnam, are being listed with deposits of 200 million KRW and monthly rents around 4 million KRW. For larger units of 144㎡, there are listings with deposits of 300 million KRW and monthly rents of 7 million KRW.

Compared to a year ago, when most semi-jeonse listings in Dogok and Daechi-dong were in the 1 million KRW monthly rent range, the atmosphere has changed, according to local real estate agencies. According to the Ministry of Land, Infrastructure and Transport's actual transaction disclosure system, in December last year, among 18 deposit-based monthly rent contracts, only one had a deposit below 300 million KRW. Eleven were semi-jeonse types with deposits exceeding 1 billion KRW. Landlords have lowered deposits while significantly raising monthly rents.

A jeonse flyer posted at a real estate agency office in Dogok-dong, Gangnam-gu, Seoul.

In the case of jeonse, which is experiencing a shortage of listings, even small to medium-sized units of 84㎡ have surpassed 2 billion KRW. For example, an 84㎡ unit in Raemian Daechi Palace in Daechi-dong is trading around 2 billion KRW. This is an increase of 400 to 500 million KRW compared to June.

Local real estate agencies cite the rapidly increasing property tax burden and the two lease laws as causes for the rise in high monthly rents. The representative of real estate agency A in the area explained, "Due to the right to request contract renewal, landlords have to keep rents fixed for four years, so they are competitively raising monthly rents to list properties. It has become difficult for anyone other than high-income earners to move in with monthly rent." Representative B also said, "Jeonse listings disappear within 1 to 5 days, so demanders are lining up."

Experts predict that this jeonse shortage will continue for the time being. Yoon Ji-hae, senior researcher at Real Estate 114, analyzed, "For the market to stabilize, supply needs to increase, but due to various factors such as the two lease laws and landlords' obligation to reside in their properties, the number of available jeonse and monthly rental listings is expected to decrease."

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