3 out of 10 Newly Built Villas in Seoul Are 'Kkangtong Jeonse'... Gangseo at 83%

Cases Where Prices Equal or Exceed Sale Prices Near 20%
"Due to Jeonse Supply-Demand Imbalance... Concerns Over Jeonse Deposit Defaults"

[Asia Economy Reporter Kim Hyemin] About 27% of newly built villas traded in Seoul during the first half of this year were so-called ‘empty shell houses’ with a jeonse-to-sale price ratio exceeding 90%. In Gangseo-gu, the proportion reached 80%, and in Dobong and Geumcheon-gu, more than half of the transactions had jeonse deposits higher than or similar to the sale prices. Concerns are rising that the jeonse prices of newly built villas have reached a risky level amid the worsening jeonse shortage.

On the 18th, Station3, which operates the real estate platform Dabang, conducted a full survey of 2,752 jeonse transactions for newly built villas constructed in Seoul this year, based on actual transaction data from the Ministry of Land, Infrastructure and Transport. The results showed that 739 transactions, or 26.9% of the total, had a jeonse-to-sale price ratio of 90% or higher. Moreover, cases where the jeonse price was equal to or higher than the sale price accounted for 19.8% (554 transactions).

The proportion of ‘empty shell houses’ was particularly notable in the southwestern areas of Seoul, such as Gangseo, Dobong, and Geumcheon-gu. In Gangseo-gu, 290 out of 351 jeonse transactions had a jeonse-to-sale price ratio exceeding 90%, representing 82.6% of the total?meaning 8 out of 10 transactions raised concerns about empty shell houses. Especially, 252 transactions in Hwagok-dong accounted for most of the high jeonse ratio transactions within Gangseo-gu.

In Dobong-gu, 22 out of 40 transactions (55%) had a jeonse-to-sale price ratio over 90%. In Geumcheon-gu, 62 out of 121 transactions, or about 51.2%, were at this level. Empty shell houses were particularly common in newly built villas in Doksan-dong and Siheung-dong. In Eunpyeong-gu, 57 out of 134 transactions (42.5%) exceeded a 90% jeonse ratio, with many transactions centered around Yeokchon-dong and Galhyeon-dong.

Additionally, in areas such as Gangbuk, Seodaemun, Jongno, Yangcheon, Gwanak, and Guro, about half of the newly built villa jeonse transactions had jeonse prices exceeding 90% of the sale price.

The high incidence of empty shell jeonse in newly built villas is pointed out as a marketing strategy to facilitate sales. Villa developers often find tenants before owners after completion, leveraging the fact that buyers can purchase the property with minimal personal capital by combining the tenant’s jeonse deposit. Dabang explained that such transactions are especially common when the real estate market sentiment is favorable.

Empty shell houses become problematic when housing prices fall. The homeowner’s mortgage loan amount decreases, and due to the characteristics of villas, sales can become difficult. In such cases, problems may arise when tenants seek to recover their jeonse deposits from the owner after the lease contract expires.

A Dabang official said, "It appears that empty shell houses are increasing mainly in newly built villas due to the imbalance in jeonse supply and demand and rapid price surges," adding, "Since villas are not as easy to sell as apartments and their prices fluctuate, there is a risk that tenants could lose their jeonse deposits in the worst-case scenario," urging caution.

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