Has Seoul's Jeonse Housing Shortage Eased? Surge in Record Prices Slows Down

In February, Among 1,033 Apartment Jeonse Contracts, Only 51 Were Reported as Highest Prices
Daechi-dong 1 Case, Jamsil-dong 0 Cases, Ahyeon-dong 0 Cases
However, Spring Move-in Volume Decrease and 2·4 Measures Are Variables

Apartment complexes in downtown Seoul as seen from 63 Square in Yeouido, Seoul [Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] Since the implementation of the new Housing Lease Protection Act, including the right to request contract renewal and the rent ceiling system for jeonse and monthly rent, the jeonse prices of apartments in major areas of Seoul, which had soared to unprecedented heights, appear to have stabilized in February. As the shortage of jeonse listings eased, the streak of record-high prices has temporarily halted. However, the market assessment suggests that it is difficult to rule out the possibility of a recurrence of the jeonse shortage due to a lack of new housing supply this spring and concerns over increased jeonse demand following the government's 2·4 real estate measures.

On the 10th, an analysis by Asia Economy of the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system showed that among 1,033 jeonse contracts reported in Seoul apartments in February, only 51 were at record-high prices. Record-high transactions have slowed not only in low- to mid-priced apartments in the outskirts but also in the Gangnam area and downtown.

In Daechi-dong, Gangnam-gu, where there is high demand for school districts and academies, among 17 jeonse transactions in February, the only record-high price was for a 114㎡ (exclusive area) unit in Raemian Daechi Palace, which traded at 2.6 billion KRW. Similarly, in nearby Samseong-dong, only 1 out of 10 transactions was at a record-high price. In Jamsil-dong, Songpa-gu, there were no record-high transactions among 17 jeonse deals. Apartments such as Asia Athlete Village, Trizium, and Resentz all contracted at prices lower than their highest recorded prices.

The situation is similar in the downtown area. For example, a jeonse contract for an 84㎡ unit in Mapo Raemian Prugio, Ahyeon-dong, Mapo-gu, was confirmed to have been signed at 1 billion KRW lower than the highest price of 1.1 billion KRW recorded in December last year. A representative from a local real estate agency in the area said, "As listings accumulate, transactions are mainly happening with cheaper properties," adding, "In nearby older complexes, there are quite a few jeonse listings that do not rent even when prices are lowered." The slowdown in the rise of jeonse prices in Seoul is analyzed to be due to an increase in listings that had disappeared after the implementation of the two lease laws. According to the real estate big data company Apartment Actual Transaction Price, as of the 10th, jeonse listings numbered 21,959, a 78.7% increase compared to two months ago (12,288 listings).

However, experts caution that it is premature to conclude that the jeonse market has entered a stable phase based on this atmosphere alone. The supply of new housing in spring is decreasing, and there is a possibility that jeonse demand will increase as people wait for new apartment sales amid expectations of expanded housing supply following the 2·4 measures. According to Real Estate 114, the number of units scheduled for occupancy in February to March this year is predicted to be 52,894 units across 78 complexes, a 14.6% decrease compared to the same period last year (61,944 units). Yang Ji-young, director of R&C Research Institute, said, "With the 2·4 measures causing an increase in applicants waiting for subscription, jeonse demand will rise, and if redevelopment projects become active leading to more relocation demand, instability in the jeonse market could increase."

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