'National Standard Apartment' with Jeonse Price Over 1.5 Billion Won... Rapid Increase in 3 Years

Sharp Rise in Jeonse Prices After New Lease Law Implementation
84㎡ Exclusive Area with Jeonse Price Exceeding 1.5 Billion Won

In the past three years, the number of apartment complexes with a 84㎡ (exclusive area) where the jeonse price exceeds 1.5 billion KRW has surged.

On the 3rd, real estate information provider Economy Man Lab analyzed the Ministry of Land, Infrastructure and Transport's apartment actual transaction price disclosure system and found that the number of 84㎡ apartments with jeonse prices exceeding 1.5 billion KRW increased from 3 complexes in 2018 to 53 complexes currently.

84㎡ corresponds to the 32~33 pyeong apartment size, known as the "national standard size" based on the sale area. The 1.5 billion KRW threshold is also the limit beyond which housing mortgage loans are prohibited by financial institutions.

In Seoul, Gangnam-gu, where high-priced complexes are concentrated, had the most with 26 complexes, followed by Seocho-gu with 21, and Songpa-gu with 4. Out of the total 53 complexes, 51 were concentrated in the three Gangnam districts. Outside the Gangnam 3 districts, Seongdong-gu and Dongjak-gu each had one complex included.

The increase in high-priced mid-sized apartments exceeding 1.5 billion KRW is interpreted as an effect of the sharp rise in jeonse prices following the implementation of the contract renewal request system and the jeonse/monthly rent cap system, which were enacted through the amendment of the Housing Lease Protection Act at the end of July last year.

The number of lease contracts with jeonse prices exceeding 1.5 billion KRW is also on the rise. In 2018, there were only 17 transactions in this price range, but it increased to 50 in 2019 and 231 last year. This year, there have already been 351 transactions, far surpassing last year's number.

The industry is raising concerns that this jeonse price increase trend may become steeper next year. Due to loan regulations weakening buying demand and the addition of pre-sale subscription waiting demand, the imbalance in jeonse supply and demand is likely to worsen.

In particular, starting next year, jeonse properties that exercised the contract renewal request right last year will begin to convert to new contracts without the 5% cap regulation, which could lead to a surge in jeonse prices.

Hwang Hansol, a research fellow at Economy Man Lab, explained, "With increased jeonse demand due to pre-subscription for the 3rd generation new towns, and with no increase in move-in volume next year plus the expiration of contract renewal rights, the number of national standard size apartments with jeonse deposits exceeding 1.5 billion KRW could increase further."

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