The Reality of Jeonse Turning into Monthly Rent... Seoul Apartment Monthly Rent Index Hits All-Time High

The Number of Monthly Rent-Included Transactions Also Hits an All-Time High

View of an apartment complex from Namsan, Seoul.
Photo by Yonhap News

[Asia Economy Reporter Kim Min-young] The phenomenon of "jeonse turning into monthly rent" has accelerated due to the enforcement of the Lease Protection Act last year. As jeonse prices soared, more tenants who could not afford the deposit have been pushed into half-jeonse (deposit-based monthly rent) or monthly rent, causing the Seoul apartment monthly rent index to hit an all-time high since the related statistics began.

According to the KB Real Estate Monthly Housing Price Trend on the 11th, the Seoul apartment monthly rent index recorded 108.6 in November. This is the highest since the statistics were first compiled. The KB apartment monthly rent index is calculated by investigating the monthly rent trends of medium-sized apartments under 95.86㎡, with the index based on 100.0 in January 2019.

The Seoul apartment monthly rent index maintained a range between 99 and 100 from December 2015 but began to rise from the end of last year. After rising to 107.0 in August this year, it reached a peak of 108.6 last month.

Not only Seoul but also the metropolitan areas such as Incheon and Gyeonggi saw increases in their apartment monthly rent indexes. Compared to the same month last year, Seoul’s apartment monthly rent index rose by 5.79 points, and Gyeonggi’s increased by 6.55 points last month.

The number of transactions involving monthly rent also reached a record high. This is believed to be due to the increase in tenants pushed into monthly rent as jeonse prices soared. According to the Seoul Real Estate Information Plaza, the volume of apartment lease transactions including monthly rent in Seoul reached 59,922 cases from January to November this year, marking the highest on record for that period.

The average monthly rent price for Seoul apartments also increased. According to the Korea Real Estate Board, the average monthly rent price for Seoul apartments rose by 10.17% over the past year. As landlords’ burdens increased due to property tax and interest rate hikes, they appear to have passed these costs on to tenants, resulting in higher monthly rent prices.

The government enforced the Housing Lease Protection Act last July, which mandates one renewal of jeonse and monthly rent contracts and limits the rent increase rate for renewal contracts to within 5%.

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