6 out of 10 People Say "House Prices Will Rise Again This Year... The Main Reason Is the Increase in Jeonse Prices"

Zigbang User Survey Results: 59% Expect House Prices to Rise This Year
65% Anticipate Jeonse Prices to Increase, Citing Jeonse Supply Shortage as Cause

[Asia Economy Reporter Onyu Lim] According to a survey conducted by Zigbang, 6 out of 10 users expect housing prices to rise this year. They cited the burden of rising monthly rent and jeonse (long-term deposit lease) prices leading to a shift toward purchasing as the main reason for the expected price increase.

On the 4th, Zigbang reported that when asked how they expect housing sale prices in their residential area to change in 2021, 59% of the total respondents (3,230 people) answered that prices would ‘rise.’ In contrast, 29% expected a ‘decline,’ and 12% anticipated ‘stability.’ By age group, the proportion of respondents in their 20s and 30s who expected prices to ‘rise’ was in the 60% range, higher than other age groups (in the 50% range).

Notably, the proportion of respondents expecting a ‘rise’ was slightly higher in Seoul and Gyeonggi Province. In Seoul, 59.5% predicted a ‘rise,’ 27.6% a ‘decline,’ and 12.9% ‘stability.’ In Gyeonggi, 59.4% expected a ‘rise,’ 28.2% a ‘decline,’ and 12.4% ‘stability.’ Other regions showed similar patterns. In Incheon, 57.7% anticipated a ‘rise,’ while 31.9% expected a ‘decline.’ Excluding Incheon, metropolitan cities and provinces predicted ‘rise’ rates of 57.7% and 58.6%, respectively, with ‘decline’ expectations at 31.4% and 30%.

The main reason cited for expecting housing price increases was the ‘shift to purchasing due to the burden of rising monthly rent and jeonse prices.’ Among the 1,904 respondents who expected a rise, 36.5% selected this reason. This was followed by △ shortage of new supply (18.6%) △ inflow of idle funds due to low interest rates (13.5%) △ simultaneous price increases in leading areas and complexes (9.8%).

While ‘shift to purchasing due to rising rent and jeonse prices’ was the most selected reason across all regions, the second and subsequent reasons varied by region. In Seoul, △ shortage of new supply (25%) and △ inflow of idle funds due to low interest rates (11.6%) followed. In Gyeonggi, similar to Seoul, △ shortage of new supply (19.6%) ranked second, followed by △ development prospects (11.5%) and △ inflow of idle funds due to low interest rates (11.2%). In Incheon, △ development prospects (15.2%) was second, with △ shortage of new supply (11.4%) and △ simultaneous price increases in leading areas and complexes (11.4%) tied for third.

In metropolitan cities, △ inflow of idle funds due to low interest rates (16.2%) was the second most cited reason, followed by △ simultaneous price increases in leading areas and complexes (13.2%). In provinces, the second most cited reason was the same as metropolitan cities, △ inflow of idle funds due to low interest rates (20.9%), followed by △ shortage of new supply (12.3%).

This year, 65.5% of all respondents predicted that jeonse prices would ‘rise.’ 18.5% expected a ‘decline,’ and 16% anticipated ‘stability.’ By age group, those in their 30s had a higher proportion expecting a ‘rise’ compared to other age groups. By region, Seoul and Gyeonggi showed higher proportions expecting a ‘rise’ compared to other areas. Seoul had 68.2%, Gyeonggi 66.9%, Incheon 61.5%, metropolitan cities 63.9%, and provinces 59.8%, showing regional differences in responses.

The main reason for the rise in jeonse prices was ‘shortage of jeonse supply (listings)’ (54.9%), followed by △ rise in jeonse prices due to increase in sale prices (29%). These two reasons accounted for the majority of responses, while other reasons had less than 10% response rates.

Regarding monthly rent price forecasts, 61.2% of all respondents expected prices to ‘rise.’ In contrast, 14.2% expected a ‘decline,’ and 24.6% anticipated ‘stability.’ By age group, those aged 40 and above (in the 60% range) had relatively higher proportions expecting a ‘rise.’ This likely reflects expectations of rent increases among age groups more likely to own rental housing.

By region, similar to jeonse prices, Seoul and Gyeonggi had higher proportions expecting a ‘rise.’ Seoul had 64.2%, Gyeonggi 62.6%, while other regions showed ‘rise’ responses in the 50% range.

Ham Young-jin, head of Zigbang Big Data Lab, analyzed, “Last year was a year with high interest in real estate as transaction volumes increased and prices rose due to abundant liquidity and low interest rates despite the adverse effects of COVID-19.” He added, “As these expectations and anxieties continue, many expect housing sale and monthly rent and jeonse prices to rise this year as well.”

Ham also noted, “However, this year, various additional supply measures such as strengthening capital gains tax and comprehensive real estate holding tax to stabilize the market and suppress investment demand, and the revival of pre-subscription for the 3rd new town development, are expected.” He added, “These changes could act as variables in the housing price market.”

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