Seoul Jeonse Price Surge That Angers More on Closer Look... "From 500 Million to 600 Million in 7 Months"

Former Blue House Policy Chief Kim Sang-jo's 'Hypocritical Jeonse Price Increase' Controversy
Seoul Apartment Average Jeonse Price Surpasses 600 Million Won for the First Time in March
Took 53 Months to Rise from 400 Million to 500 Million Won, Then Jumped to 600 Million Won at Once

View of apartments in Songpa and Gangnam areas from Maebongsan Mountain in Seoul [Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] As the ‘trick to raise jeonse prices’ by former Blue House Policy Chief Kim Sang-jo was revealed, the average jeonse price of apartments in Seoul surpassed 600 million won for the first time. It took 53 months for the average jeonse price to rise from the 400 million won range to the 500 million won range, but due to the impact of the new Lease Protection Act, it took only 7 months to increase from the 500 million won range to the 600 million won range. As the government’s policy, which has lost its moral credibility, has been proven by numbers to have increased housing burdens, public anger is also growing.

According to the KB Real Estate Monthly Housing Trend on the 30th, the average jeonse price of apartments in Seoul this month was recorded at 605.62 million won, surpassing 600 million won. This amount is close to the average apartment sale price in Seoul of 607.08 million won in May 2017, when the Moon Jae-in administration took office. The amount that could buy an apartment in Seoul just four years ago has now become barely enough to secure a jeonse lease.

The recent speed of jeonse price increases is at a level difficult for most salaried workers to afford. When KB Real Estate began this survey in June 2011, the average jeonse price of apartments in Seoul was 249.02 million won. It remained in the 200 million won range for 32 months until January 2014. It took 25 months to move from the 300 million won range to the 400 million won range, and 53 months to move from the 400 million won range to the 500 million won range. However, it took only 7 months for the jeonse price, which entered the 500 million won range in August last year, to rise to the 600 million won range.

The rise in the Gangnam area, including the three Gangnam districts of Gangnam, Seocho, and Songpa, is even steeper. While it took 37 months for the average jeonse price to rise from the 500 million won range in August 2017 to the 600 million won range, it took only 5 months to enter the 700 million won range. The average jeonse price in the Gangbuk area, which entered the 400 million won range in July last year, recorded 491.07 million won this month, approaching the 500 million won range. It took 56 months to rise from the 300 million won range to the 400 million won range.

Experts diagnose that these changes in the jeonse market are mainly due to the implementation of the new Lease Act last year, including the right to request contract renewal and the cap on jeonse and monthly rent increases. With the right to request contract renewal sharply reducing the supply of market transactions, landlords preemptively reflected four years’ worth of jeonse price increases, causing a rapid rise in jeonse prices in a short period.

Former Chief Kim was no exception. Two days before limiting rent increases to 5% upon contract renewal, he raised the jeonse price of his own apartment in Gangnam by 14.1% all at once. This is why he, who was the policy control tower during the introduction of the two lease laws, is being criticized for ‘double standards in morality’ and ‘duplicity in real estate.’

Kim Hak-ryul, head of SmartTube Real Estate Research Institute, said, "Starting with the sharp decline in jeonse supply in Seoul after the Lease Act implementation, the nationwide real estate market has become chaotic," adding, "If the jeonse issue is not resolved, it will be difficult to curb the rise in housing prices."

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