Is the Monthly Average Rent Increase Rate 0.2% This Year? ... Reasons for the Discrepancy with the Market

[Image source=Yonhap News]

[Sejong=Asia Economy Reporters Kim Hyunjung, Kim Eunbyeol] There are concerns that the government's announced average monthly rent increase rate of 0.2% this year significantly differs from the actual market perception. Despite various real estate regulations and tax rate hikes by the government, demand surged sharply, causing market prices to jump in a short period, yet statistical figures remain much lower. Ordinary citizens identify real estate as the item that will most impact next year's inflation.

According to the 'December and Annual Consumer Price Trends' released by Statistics Korea on the 31st, this year's rent rose by only 0.2% on average monthly compared to the previous year. Jeonse (long-term deposit lease) and monthly rent increased by 0.3% and 0.1%, respectively. Among the consumer price trends announced monthly by Statistics Korea, the only indicator directly related to real estate prices is 'rent.' Since housing, including apartments, is classified as an 'asset' rather than a 'consumer good,' changes in sales prices are not separately surveyed.

However, the '0.2% increase' reported by Statistics Korea shows a large gap compared to diagnoses by private or other institutions. The private research institute KB Real Estate viewed this year's nationwide Jeonse price increase rate as the largest in nine years. According to the monthly KB Housing Market Trends, nationwide Jeonse prices rose by 6.54% this year, the highest since 2011 (12.30%).

The Bank of Korea also released survey results indicating that future rent increases will pose the greatest burden on inflation. According to a survey conducted this month targeting 2,500 households (2,381 responses), the proportion of responses identifying rent as a major factor influencing consumer price inflation over the next year was highest at 58.0%. This was a multiple-choice survey, meaning 58% of all respondents considered Jeonse prices, monthly rent, and other rents as factors affecting inflation. The proportion of respondents citing rent as an inflation expectation factor has sharply increased this year. Last year, it was below 20%, and until the first half of this year, about 18-25% identified rent as an inflation factor, but from July, over 40% viewed rent as a cause of inflation. Subsequently, the proportion rose sharply to 46.9% in October and 56.3% in November.

Regarding this, a Statistics Korea official explained, "Statistics Korea only reflects figures for households that renewed their Jeonse or monthly rent contracts among the sample households," adding, "Compared to the Korea Real Estate Board (formerly Korea Appraisal Board) statistics, the time-series graph shows smaller fluctuations and moves slowly."

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