Move-in 'Sudden Drop' Move-out 'Sharp Rise'... This Summer Seoul Jeonse Market Is Unstable

6~9 Months Move-in Volume Reaches 70% of Last Year
Large-scale Reconstruction Relocation in Gangnam...Concerns Over Rental Market Tightening

[Asia Economy Reporter Onyu Lim] An uneasy shadow is looming over the early summer Seoul jeonse market. The supply of move-in units from June to September is only 70% of the same period last year, which could stimulate jeonse prices. In the Gangnam area, where large-scale reconstruction complexes are scheduled for relocation, there are even concerns that last year's jeonse crisis might be repeated.

On the 12th, Asia Economy commissioned real estate information company Zigbang to analyze the data, finding that the number of apartment units scheduled for move-in in Seoul from June to September over four months totaled 10,752 households. This is a 30% (4,585 households) decrease compared to 15,337 households during the same period last year. Except for July, the other three months all show a decrease in move-in supply compared to the previous year. Following May, when Seoul's move-in supply recorded zero for the first time in 6 years and 9 months since July 2014, the summer season's new move-in supply is also insufficient.

The supply of move-in units is considered a key factor determining the trend of jeonse prices. Moreover, Seoul's jeonse prices, which had just shown signs of stabilization, have recently increased at a faster rate, indicating an unstable trend. According to the Korea Real Estate Board, Seoul apartment jeonse prices rose by 0.03% in the first week of May, higher than the previous week's 0.02%. After steadily narrowing since November last year (0.15%), the rate of increase has widened again after six months.

There are concerns that the jeonse crisis, which peaked in the second half of last year due to the implementation of the new lease protection laws such as the contract renewal request right and the rent ceiling system, could repeat this summer. The acceleration of the conversion of jeonse to monthly rent due to increased tax burdens on multi-homeowners following the rise in official property prices is reducing the existing jeonse supply. According to real transaction data from the real estate big data company Apartment Real Transaction Price, the current number of jeonse listings in Seoul is 22,146 households, down by 1,342 households from 23,488 households a month ago.

In particular, the Gangnam area faces concerns over worsening jeonse difficulties due to the overlapping large-scale relocation demand from reconstruction. The Bangbae 13 District in Seocho-gu (1,550 households) already began relocation at the end of March, and about 4,000 households including Banpo Jugong 1st Complex 1, 2, and 4 Districts and Shinbanpo 18th and 21st Complexes in Seocho-gu are about to start relocation procedures.

In fact, jeonse prices are continuously hitting record highs in various parts of Gangnam. For example, an 84.96㎡ (exclusive area) unit in Banpo Liche was contracted last month at 1.65 billion KRW, setting a new jeonse contract record. The 35-year-old Banpo Mido 1st Complex 84.96㎡ also set a record by being contracted this month at 1.1 billion KRW.

As expectations for the easing of reconstruction regulations in Gangnam rise, more homeowners are choosing to live in their properties, making it even harder for them to find jeonse homes. For complexes that have not yet established a union, residents must fulfill two years of actual residence to receive move-in rights after reconstruction.

Ham Young-jin, head of Zigbang Big Data Lab, forecasted, "While Seoul's jeonse instability is not at a severe level, the jeonse price trends in areas with reconstruction relocation demand this year, including Gangnam, could influence the overall market."

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