Apartment Move-in Volume Decreases Until 2023... "Lease 2 Laws Should Be Postponed"

3rd New Towns Expected to Be Available for Move-in Around 2024~2025
Need for Private Rental Supply Due to Relaxation of Actual Residence Requirements
Alternative Housing Supply Such as Officetels and Urban-Type Residential Housing

On the 14th, an apartment in downtown Seoul as seen from Namsan, Seoul

The supply of apartment move-ins in the Seoul metropolitan area is expected to decrease until 2023, raising concerns that instability in the jeonse and monthly rent market may intensify. There are calls to encourage the private sector to supply rental housing by suspending the Lease Protection Act (Imdaecha 2-beop) and other regulations until the 3rd New Town supply is available.

On the 24th, the Korea Research Institute for Construction Industry stated in its Construction Trend Briefing that "until the full-scale move-in of the 3rd New Town occurs, the right to request contract renewal and the rent ceiling system (Lease Protection Act) should be suspended, and the actual residence requirements should be relaxed to enable rental housing supply in the existing housing market."

According to Real Estate 114, the nationwide apartment move-in volume in 2021 was 286,000 units, a 20.8% decrease compared to the previous year. In particular, the Seoul metropolitan area is expected to see a continuous decline for three consecutive years with 164,000 units in 2021, 161,000 units in 2022, and 150,000 units in 2023.

The decrease in move-in volume is fueling instability in the apartment jeonse market. The institute explained, "It appears that the decline in apartment move-in volume, along with policy factors such as the implementation of the Lease Protection Act and strengthened actual residence requirements, have collectively influenced the rise in jeonse and monthly rent prices."

The strengthened contract renewal rights and rent ceiling regulations implemented on July 31 last year, along with the comprehensively tightened actual residence requirements, have reduced the supply of rental housing.

The 3rd New Town is expected to resolve the shortage of move-in volume all at once. However, considering the schedule for the 3rd New Town, the initial move-ins are anticipated between 2024 and 2025. Until then, instability in the rental market due to the decrease in apartment move-in volume is likely to continue.

This is why there are calls to activate the supply of alternative housing products that can be supplied in the short term and can substitute apartments until the 3rd New Town supply is available.

Researcher Heo Yoon-kyung of the Korea Research Institute for Construction Industry said, "We need to actively consider the supply of officetels, urban lifestyle housing, and other options that can quickly meet apartment demand over the next 3 to 5 years."

Additionally, Researcher Heo emphasized, "Policies that overlap regulations or cause side effects by relaxing actual residence requirements should be eased to encourage rental housing supply. The right to request contract renewal and rent ceiling system should be suspended, and actual residence requirements relaxed to enable rental housing supply in the existing housing market."

Meanwhile, in August 2021, nationwide housing jeonse prices rose by 0.63%, marking an increase in the rate of growth for three consecutive months. The cumulative increase from January to August was 4.50%, approaching the previous year's annual increase of 4.61%.

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