Seoul Jeonse Listings Accumulate and Demand Slows... Is a 'Turning Point' Coming?

Increase in Jeonse Listings Across All 25 Seoul Districts
Demand Slows... Supply-Demand Index Hits Lowest This Year
"Listings Available but Demand Low Due to High Prices"
However, Landlords Still Asking High Prices
Holding Firm on Jeonse Prices Despite Lease Laws

As housing sales transactions sharply contract, changes are also being detected in the Seoul apartment jeonse (long-term lease) market. With the autumn moving season coming to an end, the volume of jeonse and wolse (monthly rent) transactions is declining, while listings are on the rise. Analysts suggest that the burden of soaring new jeonse and wolse prices following the introduction of the 'Lease 3 Act' and confusion over loan regulations are causing a decrease in jeonse demand. With the winter off-season soon beginning, there are forecasts that a 'turning point' may come to the jeonse market.

According to frontline brokerage industry sources on the 20th, jeonse listings are increasing in apartment complexes across major areas in Seoul. This is interpreted as a result of reduced demand and accumulated listings due to the government tightening loans to manage household debt. Another cause cited is the continuous increase in jeonse listings in reconstruction complexes after the ruling party and government withdrew the two-year actual residence requirement for reconstruction association members in July.

Seoul Jeonse Listings Steadily Increasing

Looking at statistics from the real estate information platform 'Apartment Real Transaction Price,' as of this date, the total number of jeonse listings for apartments in Seoul is 26,819, showing a steady increase since August. In the past month, jeonse listings have increased in all 25 autonomous districts of Seoul. Seodaemun-gu (52.0%), Seongbuk-gu (49.1%), and Mapo-gu (47.5%) saw the largest increases in listings, while districts with many mid- to low-priced complexes such as Guro-gu (37.5%), Gangbuk-gu (34.8%), and Gangseo-gu (33.2%) also experienced significant growth.

A representative from Guro-dong A Real Estate Agency (licensed) in Guro-gu said, "Jeonse listings keep coming out, but there are not many demanders," adding, "Landlords are listing jeonse originally priced at 400 million won at 500 million won, so demanders seem to feel a heavy price burden." A nearby B agency representative also said, "There are jeonse listings, but they are not going out, so it's chaotic," and added, "Jeonse is usually off-season in November and December, so the situation is likely to remain similar for a while."

In fact, the Seoul Apartment Jeonse Supply-Demand Index from the Korea Real Estate Board, which gauges actual jeonse demand, recorded 102.9 last week, the lowest this year. Compared to the same period last year (124.5), jeonse demand has significantly decreased. The supply-demand index is based on 100; a value below 100 means supply exceeds demand. Although demand is still higher, the supply-demand imbalance that has continued since the end of last year is considered somewhat resolved.

Jeonse transactions are also declining. According to the Seoul Real Estate Information Plaza, the volume of jeonse transactions in Seoul was 15,486 in August, 9,717 in September, and 5,226 in October (as of this date). For October, even though the middle of the month has passed, the volume is only about one-third of last October's (16,686 transactions).

Prices Have Not Fallen Yet... High Asking Prices Maintained

Typically, an increase in lease listings and a decrease in transaction volume are interpreted as signs of price declines. However, jeonse prices are still on the rise. Expectations for rising sales prices linked to jeonse prices remain strong, and due to the Lease 3 Act limiting rent increases to 5% upon renewal after a tenant moves in, landlords are maintaining high asking prices.

A representative from C Real Estate in Gasan-dong, Geumcheon-gu explained, "For a 400 million won jeonse, the tenant only needs to pay 20 million won more after two years, so landlords want to receive a high jeonse price from the start," adding, "As a result, prices remain high even with low demand, and transactions have stopped." Another agency representative said, "There are continuous inquiries about gap investments where buyers purchase homes under the condition of matching the jeonse, but these days, since jeonse transactions are not active, it has become difficult to guarantee that we can match the jeonse until the final payment."

Although the rate of increase in Seoul jeonse prices has decreased recently from 0.17% to 0.15%, 0.14%, and 0.13% over the past month, many in the industry believe it is still difficult to foresee a price decline. This is because new apartment supply is expected to decrease until next year, and jeonse demand may continue to rise due to the expansion of pre-sale subscriptions. In particular, there are concerns that in the second half of next year, tenants who have exercised their right to request contract renewal once will reach the end of their two-year term, potentially causing jeonse prices to fluctuate again.

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