Accelerating Conversion of Jeonse to Monthly Rent... 4 out of 10 Lease Transactions in Seoul

Seoul Transaction Volume Hits Yearly Low
Rising Jeonse Prices Push Tenants to Monthly Rent
Monthly Rent Share at Record High 42%

[Image source=Yonhap News]

Apartment sales and lease transactions in Seoul have sharply declined, hitting the lowest level this year. In particular, as more tenants unable to afford soaring jeonse prices are pushed into half-jeonse or monthly rent, the phenomenon of 'jeonse turning into monthly rent' is intensifying.

According to the Seoul Real Estate Information Plaza on the 31st, the number of apartment lease transactions reported in Seoul was 11,021. Although the reporting deadline is 30 days, considering that most lease transactions are reported immediately after the deal, the figure is expected to remain similar to last month's 11,339 transactions. Compared to October's 15,540 transactions, this represents a sharp drop of around 4,000 transactions.

In particular, while jeonse transactions in Seoul's lease market have rapidly decreased, monthly rent transactions have actually increased. Jeonse transactions fell from 9,313 in October to 7,475 in November and 6,403 this month, but transactions involving monthly rent dropped from 6,224 to 3,863 during the same period before rising again to 4,618. Based on the reported transactions as of this date, the share of monthly rent in lease transactions is 41.9%, the highest ever. This means that more than 4 out of 10 apartment lease transactions in Seoul involve monthly rent.

Industry experts analyze that the increase in the proportion of monthly rent is due to the sharp rise in property tax burdens on multi-homeowners, many of whom are passing some of these costs onto tenants. Additionally, after the implementation of the three lease laws?contract renewal request system, rent ceiling system, and lease reporting system?jeonse prices have skyrocketed, forcing tenants who cannot afford them to reluctantly switch to monthly rent.

The market is increasingly concerned that after the expiration of contract renewal rights in August next year, the proportion of monthly rent will further increase and prices will rise even more. According to statistics from the Korea Real Estate Board, the average monthly rent for apartments in Seoul reached 1,241,000 won last month, up 10.6% from 1,122,000 won a year earlier.

Meanwhile, as of this date, the number of apartment sales transactions in Seoul for November is tentatively counted at 1,355, about half of October's 2,196. Even December's sales transactions, based on reports so far, stand at 525, only one-third of the previous month. Considering the reporting deadline is the end of next month, it is expected to be the lowest level of the year.

With loan regulations and rising market interest rates overlapping, apartment transaction volumes in Seoul have steadily declined this year. As a result, the total transaction volume for this year is expected to be around 40,000, about half of last year's cumulative 81,193 transactions.

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