3 and a Half Years Ago, Metropolitan Area Sale Prices... Now It's 'Jeonse Prices'

Sharp Rise in Jeonse Prices Since Last Year's Lease Law Enforcement
Average Jeonse Price in Seoul Metropolitan Area Last Month 441.56 Million KRW
Higher Than Early 2018 Sale Price of 440.67 Million KRW

Last month, the average jeonse price of apartments in the Seoul metropolitan area surpassed the sales price level from early 2018. Concerns are rising that the government's implementation of the three lease laws?contract renewal request system, rent and deposit ceiling system, and lease reporting system?introduced under the pretext of ensuring tenants' housing stability, are instead increasing the burden on ordinary citizens.

According to the monthly housing price trend time series statistics from KB Kookmin Bank on the 13th, the average jeonse price of apartments in the Seoul metropolitan area last month was 441.56 million KRW. This is similar to the average sales price of apartments in the metropolitan area in January 2018, which was 440.67 million KRW. Three and a half years ago, the money that could buy an apartment now barely covers the jeonse deposit.

The jeonse prices of apartments in the metropolitan area remained around 310 million KRW during 2018-2019 but began to rise sharply after the implementation of the three lease laws in July last year. The average jeonse price in the metropolitan area was 337.37 million KRW in July last year, surpassed 400 million KRW in January this year, and has recently been soaring by about 7 million KRW each month on average.

The monthly increase rate of jeonse prices in the metropolitan area rose significantly to 2.40% in November last year, dropped to 0.86% in May this year, but has recorded over 1% monthly growth again since June. Last month, it rose by 1.61%, marking the highest increase this year. The cumulative increase rate of apartment jeonse prices in the metropolitan area reached 10.26% by August, already exceeding last year's annual increase rate of 10.23%. Although a year has passed since the lease laws were implemented, the market has not stabilized; instead, price instability is worsening.

In the metropolitan area, the increase in jeonse prices was greater in Gyeonggi and Incheon than in Seoul. Up to August this year, the apartment jeonse price increase rates were 8.70% in Seoul, 10.67% in Gyeonggi, and 12.76% in Incheon. Gyeonggi and Incheon have surpassed last year's annual increase rates of 9.95% and 6.18%, respectively. In particular, Incheon’s jeonse price increase speed is double that of last year. On the 24th of last month, a jeonse contract was signed for an 84.45㎡ (exclusive area) apartment at ‘The Sharp Songdo Marina Bay’ in Songdo-dong, Yeonsu-gu, Incheon, for 650 million KRW, which is 150 million KRW higher than the previous highest price of 500 million KRW recorded on the 12th of the same month.

In Gyeonggi Province, the jeonse price of apartments in Siheung City rose by 22.14% this year, the highest increase nationwide. However, the jeonse-to-sale price ratio, which shows the ratio of jeonse price to sales price, has steadily declined this year: 55.3% in Seoul, 66.4% in Gyeonggi, and 68.3% in Incheon. Although jeonse prices have risen significantly, sales prices have increased even more. Industry insiders express concerns that starting from the end of July next year, when the two-year extended contracts under the contract renewal request system begin to expire, new contracts not subject to the 5% jeonse price cap will continue, potentially causing further instability in the lease market.

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