Seocho Jeonse Prices Challenge Gangnam... Surpassing 11 Million KRW per 1㎡

Sharp Rise in Jeonse Prices Due to Large-Scale Reconstruction Relocation
Gap with Gangnam Narrows from 1.1 Million to 510,000 KRW per 1㎡ in Two Months
"It May Take Time for the Jeonse Market to Stabilize for a While"

View of an apartment complex from Seoul Sky, the observation deck of Lotte World Tower in Songpa-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] The average jeonse price per square meter in apartments in Seocho-gu, Seoul, has surpassed 11 million KRW. Due to large-scale reconstruction relocation demand, jeonse prices have surged, approaching even those in Gangnam-gu.

According to the KB Kookmin Bank monthly housing price trend on the 29th, the average jeonse price per square meter for apartments in Seocho-gu this month was recorded at 11.351 million KRW. This is an increase of 737,000 KRW from 10.614 million KRW the previous month. The rate of increase is 6.94%, which is four times the Seoul average of 1.79%.

Jeonse prices for apartments in Seocho-gu have been rising sharply since the implementation of the new Housing Lease Protection Act, including the contract renewal request system and the jeonse/monthly rent cap system. The average price per square meter, which was 9.036 million KRW in August last year, exceeded 10 million KRW in December at 10.108 million KRW, and then rose to the 11 million KRW level again within six months.

The gap with Gangnam-gu, which ranks first nationwide in jeonse prices, has also significantly narrowed. The price difference, which was 1.1 million KRW in April, shrank to 515,000 KRW in two months. This month, the average jeonse price per square meter for apartments in Gangnam-gu is 11.866 million KRW.

The recent rise in jeonse prices in Seocho-gu is due to large-scale reconstruction relocation demand. Banpo Jugong Complex 1 District 1, 2, and 4 blocks (2,120 households), Sinbanpo 18th Complex (182 households), Sinbanpo 21st Complex (108 households), and Bangbae 13 District (2,900 households) are currently undergoing relocation, and Banpo Jugong Complex 1 District 3 block (1,490 households) is scheduled for relocation in the second half of the year. While jeonse demand has surged in a short period, the supply of jeonse has been insufficient since the new lease law was enacted, intensifying the supply-demand imbalance.

As a result, record-high jeonse contracts are occurring one after another. An 84㎡ (exclusive area) unit in Acro River Park, Banpo-dong, signed a jeonse contract for 2.3 billion KRW on the 10th of this month. This is an increase of 200 million KRW compared to 2.1 billion KRW five months ago. A 114㎡ unit in Sinbanpo Xi, Jamwon-dong, was traded for 2.3 billion KRW on the 18th, rising by 400 million KRW compared to 1.9 billion KRW in September last year.

The jeonse shortage originating from Seocho is also spreading to the neighboring Dongjak-gu. In June, the average jeonse price per square meter for apartments in Dongjak-gu reached 7.095 million KRW, surpassing 7 million KRW for the first time. With the recent start of relocation in Noryangjin 6 District in the Dongjak area, concerns are rising that the jeonse shortage may spread to surrounding areas such as Yeongdeungpo-gu.

Ham Young-jin, head of the Zigbang Big Data Lab, said, "Due to the new lease law, an increase in landlords' actual residence, and the conversion of jeonse to monthly rent, the supply-demand situation is challenging. With the upcoming pre-subscription for the 3rd New Town, it is expected to take time for the jeonse market to stabilize."

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