"Wolmyo Gyeojameokgi Monthly Rent"... Reduction in Jeonse Proportion of Seoul Apartments in the First Half of the Year

Monthly Rent Transactions at 33.7%, Increasing Over 5%p Compared to Last Year
Jeonse Share Shrinks from 71.4% to 66.3%
Severe Supply Shortage Since New Lease Law Implementation
More Landlords Cover Property Taxes with Monthly Rent

[Asia Economy Reporter Onyu Lim] In the first half of this year, the Seoul apartment rental market saw a notable shift from jeonse (lump-sum deposit lease) to monthly rent. This is attributed to the severe shortage of listings following the implementation of the new Lease Protection Act, which has led to an increase in landlords preferring monthly rent. Tenants, unable to afford the soaring jeonse prices caused by supply-demand imbalances, are reluctantly opting for monthly rent.

According to the Seoul Real Estate Information Plaza on the 8th, from January to June this year, a total of 80,669 apartment lease transactions were recorded in Seoul. Among these, monthly rent transactions, including semi-monthly and semi-jeonse leases, accounted for 27,235 cases, representing 33.7% of the total. This is 5.1 percentage points higher than the 28.6% share of monthly rent transactions during the same period last year (27,264 out of 95,128 transactions). In other words, the pure jeonse share sharply declined from 71.4% to 66.3%.

The shift from jeonse to monthly rent in Seoul apartments is largely due to the new Lease Protection Act implemented in July last year. The use of the contract renewal request right has reduced the number of listings on the market, intensifying the supply shortage. Moreover, as multi-homeowners face increased property taxes, many landlords have turned to monthly rent to cover these costs, exacerbating the scarcity of listings. According to Apartment Real Transaction Data, a real estate big data company, recent jeonse listings in Seoul apartments fluctuate between the high 19,000s and low 20,000s. This is roughly half compared to around 40,000 listings in July last year.

A bigger issue is that the jeonse supply shortage is fueling price increases. According to KB Real Estate, the average jeonse price for Seoul apartments rose from 575.82 million KRW in January to over 600 million KRW in March, reaching 626.78 million KRW in June. This means an increase of more than 50 million KRW in five months. Tenants, unable to cope with the skyrocketing jeonse prices, are reluctantly choosing monthly rent.

The government views the jeonse shortage as a temporary phenomenon and expects improvement by the end of the year. Recently, Minister of Land, Infrastructure and Transport Noh Hyung-wook stated, "While relocation demand has decreased by one-third, the volume of new move-ins is similar to past averages. Although there may be localized supply-demand issues due to concentrated relocation demand in Seocho-gu from redevelopment projects, the overall supply-demand problem is expected to improve by the end of the year."

However, experts anticipate that the jeonse shortage caused by the lack of listings will persist for some time. Jang Jae-hyun, head of research at Real Today, pointed out, "Due to the new Lease Protection Act, the number of contract renewals has increased, resulting in a lack of supply. Since the 3rd New Town move-ins are at least three years away, there is significant jeonse demand waiting for that. With supply far below demand, jeonse prices are bound to rise."

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