Seoul Jeonse Prices Continue to Drop... Is It a Downtrend or Just a Correction?

Gangnam, Mapo, Gangdong Jeonse Prices Reverse to Decline
Will Seoul's Jeonse Market Stabilize Across the City?
Mixed Outlooks by Region
Rapidly Increasing Listings Plateau at Around 23,000 Units
Second Quarter Housing Supply Also Drops Sharply, Sustaining Concerns

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] The apartment jeonse prices in Seoul's Gangnam, Mapo, and Gangdong districts, which had been rising for as long as 90 weeks, have reversed and started to decline. The surge triggered by the implementation of the new lease protection laws, including the contract renewal request right and the rent ceiling system, appears to be calming down for now. However, concerns remain that jeonse prices may rise again after a brief adjustment due to variables such as a sharp decrease in housing supply in the second quarter and the introduction of the jeonse and monthly rent reporting system.

According to the Korea Real Estate Board on the 5th, the weekly increase rate of Seoul apartment jeonse prices in the last week of March was only 0.03%. In particular, jeonse prices in the Gangnam, Mapo, and Gangdong districts recorded negative growth. Along with Gangnam-gu (-0.02%), where jeonse prices fell for two consecutive weeks, Mapo-gu (-0.01%) and Gangdong-gu (-0.02%) stopped rising after 90 weeks and 59 weeks respectively and turned to a downward trend. The Real Estate Board explained, "Fatigue over the rapid rise in jeonse prices has increased, and with an increase in listings, the overall rise in Seoul has narrowed." Accordingly, expectations are growing that the jeonse market, which had been abnormally rising since the implementation of the new lease law, may stabilize.

However, reactions on the ground are mixed. A representative from real estate agency A in Daechi-dong, Gangnam-gu, known as the "number one education district," said, "Even though asking prices have dropped by more than 100 million won due to a sharp decline in school district demand, listings are piling up," adding, "Jeonse prices have become so high that it will be difficult for the same upward trend as last year to repeat." On the other hand, a representative from real estate agency B in Ahyeon-dong, Mapo-gu, said, "It is true that there is a jeonse price adjustment due to balance payment issues as large complexes like Mapo Prestige have recently moved in," but predicted, "Many affordable listings have been sold out, so prices are likely to rise again once the move-in period ends."

While prospects vary by region, it is also noteworthy that the rapid increase in jeonse listings has stopped. According to Apartment Real Transaction Data, a real estate big data company, as of the 5th, the total number of jeonse listings for Seoul apartments is 23,297. Compared to 23,796 listings 10 days ago, the number has actually decreased by about 100. Listings increased from around 17,000 in January to around 22,000 in February, and surpassed 23,000 in March, but have since fluctuated between increases and decreases.

Additionally, the sharp decrease in housing supply in the second quarter is another variable. According to Real Estate 114, the number of apartment move-ins in Seoul from April to June is expected to be 6,096 households, about half of the 11,435 households in the first quarter. A total of 15 apartment complexes will begin move-ins, most of which are small-scale complexes with fewer than 200 households.

There are also concerns that the jeonse and monthly rent reporting system, which will be fully introduced from June, could stimulate jeonse prices. The reporting system mandates that lease contracts be reported within 30 days of the contract date, including details such as contract amount, contract date, area, floor, renewal status, and contract period. The market worries that if high-priced jeonse transactions continue, they could serve as a minimum price benchmark for surrounding prices.

Yoon Ji-hae, senior researcher at Real Estate 114, said, "There are cases where jeonse prices fell as some demand shifted to purchases after a short-term rise in jeonse prices and an increase in move-in supply in the first quarter," but added, "However, with a decrease in move-in supply from April, competition for new homes is expected to intensify, so it is not easy to expect a weak trend in jeonse prices."

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