As Apartment Jeonse Prices Rise, Shift to Officetels... Increasing Price Growth in Seoul and Provinces

2020 Q4 Officetel Price Trend Survey
Increase in Jeonse and Monthly Rent Prices... Rental Market Instability
Officetel Demand Shift as Apartment Prices Surge

(Data from Korea Real Estate Board)

[Asia Economy Reporter Moon Jiwon] Following the implementation of the rent ceiling system and the right to request contract renewal, the housing lease market continues to show instability, with nationwide officetel jeonse prices rising significantly compared to the previous quarter.

According to the 4th quarter 2020 officetel price trend survey released by the Korea Real Estate Board on the 4th, nationwide officetel jeonse prices increased by 0.62%, expanding the rise from the previous quarter (0.27%).

The Seoul metropolitan area (0.35%→0.70%) and Seoul (0.33%→0.57%) also saw an increase in the rate of rise, while the provinces turned from a decline of -0.04% to a rise of 0.28%.

(Data from Korea Real Estate Board)

The rise in officetel jeonse prices is interpreted as a result of increased demand for officetels due to rising apartment jeonse prices and a continued shortage of jeonse supply following the new lease law implementation.

The Korea Real Estate Board explained, "Due to expanded low-interest liquidity and continuous housing price increases, landlords prefer monthly rent, intensifying supply-demand imbalance, leading to a 0.57% rise in Seoul officetel jeonse prices compared to the previous quarter."

In Gyeonggi-do, jeonse prices rose 0.86% from the previous quarter as asking prices increased with growing demand for residential officetels near excellent transportation and school districts, and provinces also saw a 0.28% rise due to increased migration demand following a sharp rise in apartment jeonse prices.

The average officetel jeonse prices were surveyed as 165.41 million KRW nationwide, 178.15 million KRW in the metropolitan area, 112.74 million KRW in the provinces, 203.1 million KRW in Seoul, and 168.68 million KRW in Gyeonggi-do.

(Data from Korea Real Estate Board)

Officetel monthly rent prices are also showing a rising trend. Nationwide, they rose 0.25%, expanding from 0.07% in the previous quarter. The metropolitan area (0.13%→0.29%), Seoul (0.10%→0.10%), and provinces (-0.15%→0.06%) all showed somewhat unstable patterns.

In Seoul, the shortage of jeonse supply in the housing market, including quasi-housing, has continued to push up jeonse prices, increasing demand for conversion to monthly rent. In Gyeonggi-do, as apartment prices continued to rise, demand for medium-sized or larger officetels with good transportation and school districts surged, leading to a 0.52% increase compared to the previous quarter.

The average monthly rent deposit was 13.13 million KRW nationwide, 13.64 million KRW in the metropolitan area, 11.04 million KRW in the provinces, 15.27 million KRW in Seoul, and 12.46 million KRW in Gyeonggi-do, while the average monthly rent prices were 663,000 KRW nationwide, 701,000 KRW in the metropolitan area, 506,000 KRW in the provinces, 778,000 KRW in Seoul, and 666,000 KRW in Gyeonggi-do.

(Data from Korea Real Estate Board)

Officetel sale prices also generally showed an expanded rise or reduced decline except in Seoul. Nationwide, prices rose 0.05%, turning from a decline of -0.06% in the previous quarter to an increase. The metropolitan area (0.02%→0.10%) saw an expanded rise, and provinces (-0.38%→-0.14%) saw a reduced decline. In contrast, Seoul (0.12%→0.01%) showed a slowdown in the upward trend.

In Seoul, as officetels began to be counted as part of the housing stock, some investment sentiment weakened, slowing the price increase. In Incheon (-0.15%), the supply of alternative housing such as urban lifestyle housing and new officetels increased, causing sale prices to fall compared to the previous quarter.

In Gyeonggi-do, sale prices rose 0.28% from the previous quarter as residential officetel prices increased in Gwangmyeong, where there is reconstruction relocation demand, and in Gimpo, Seongnam, and Hanam, which have good accessibility to Seoul.

The average officetel sale prices were 204.5 million KRW nationwide, 218.15 million KRW in the metropolitan area, 148.08 million KRW in the provinces, 251.95 million KRW in Seoul, and 203.38 million KRW in Gyeonggi-do.

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