"Listings Increased"…Why Seoul Jeonse Prices Still Soar in Early Autumn

Seoul Apartment Jeonse Listings Increase by 13% in Two Months
But Still Insufficient Compared to Pre-New Lease Law
Seoul Jeonse Prices Rise by 180 Million Won in Two Years

Apartment complexes viewed from Namsan, Seoul Photo by Yonhap News

[Asia Economy Reporter Onyu Lim] The Seoul jeonse (long-term lease) housing shortage shows little sign of easing. The rate of increase in jeonse prices has continued to hit record highs this year, signaling the reality of a jeonse crisis this fall. Although the number of jeonse listings has slightly increased following the repeal of the two-year owner-occupancy requirement for reconstruction projects, it remains at a drought level compared to before the new Housing Lease Protection Act was implemented. Prices have also surged by an average of 200 million KRW over two years, and combined with tightened loan regulations by financial authorities, concerns are growing that many tenants will become jeonse refugees.

According to Apartment Real Transaction Data, a real estate big data company, as of the 7th, the number of jeonse listings for Seoul apartments was 22,851, a 13.3% increase from 20,153 two months ago. This is analyzed as a result of the government and ruling party scrapping the bill that would have required reconstruction association members in speculative overheated zones to reside for two years, which was abandoned in July. This led some landlords to shift from owner-occupancy to rental. Accordingly, voices in the market say, "Unnecessary regulations have been repealed, and the distorted market is normalizing."

However, the overall shortage of listings remains. Compared to about 40,000 listings in July last year, just before the implementation of the Lease Renewal Request Right and the Jeonse/Monthly Rent Cap under the Lease Act, Seoul apartment jeonse listings have halved.

The persistent shortage of listings is driving jeonse prices sharply higher. According to KB Real Estate, the average jeonse price for Seoul apartments in August was 643.45 million KRW, up 178.04 million KRW (38.25%) from 465.41 million KRW in August 2019. Comparing actual transaction prices, the perceived increase is even greater. The jeonse price for an 84.98㎡ unit at Raemian Daechi Palace in Daechi-dong, Gangnam-gu, rose from 1.4 billion KRW in Q3 2019 to 2.11 billion KRW in Q3 this year, an increase of 710 million KRW. At Banpo Xi in Banpo-dong, Seocho-gu, an 84.94㎡ unit increased from 1.25 billion KRW to 1.8 billion KRW in the same period, up 550 million KRW. In Ahyeon-dong, Mapo-gu, a 84.59㎡ unit at Mapo Raemian Prugio rose from 760 million KRW to 1.12 billion KRW, up 360 million KRW.

A tenant, Mr. A, who recently secured a jeonse home in Seocho-gu, lamented, "There are hardly any jeonse homes available, existing tenants are reluctant to show their homes, and when I finally found a semi-jeonse, the landlord raised the monthly rent by 400,000 KRW on the day of the contract, which felt like an abuse of power."

Experts predict that overcoming the jeonse shortage will be difficult as long as the shortage of listings caused by the exercise of the lease renewal request right continues. Moreover, from this month through November, the peak moving season in fall, the number of new apartment move-ins in Seoul is 6,304 units, nearly 20% less than the 7,740 units during the same period last year. With listings scarce and jeonse prices soaring, tenants are facing deepening despair amid tightened loan restrictions.

Yoon Ji-hae, Senior Researcher at Real Estate 114, said, "Although the repeal of the two-year owner-occupancy requirement for reconstruction slightly increased jeonse listings, it is limited in offsetting the decline caused by the introduction of the lease renewal request right. The owner-occupancy rate among landlords of new apartments is rising, and with reduced move-in volumes, there is concern that the jeonse shortage in Seoul will persist."

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