Non-homeowners living in Seoul find it 2.9 times harder to own a home over the past 5 years

Seoul Jeonse Price Ratio Drops the Most Nationwide in 5 Years

Difference Between Nationwide Apartment Sale Price and Jeonse Price per Pyeong Increases 2.5 Times

Jeonse Price Ratio Declines in 11 out of 17 Cities and Provinces Nationwide Over 5 Years

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] Over the past five years, apartment sale prices have risen sharply compared to jeonse prices, causing the apartment jeonse price ratio to hit its lowest point in 98 months. Due to the high apartment prices in Seoul and the metropolitan area, it has become even more difficult for non-homeowners to purchase their own homes in the last five years.

On the 25th, Real House, a specialized sales evaluation company, analyzed real estate statistical information from the Korea Real Estate Board and found that over the past five years (March 2017 to March 2022), the nationwide average apartment sale price per pyeong increased by 80.6%, while the jeonse price rose by 53.4%, widening the gap between sale and jeonse prices. In particular, the average sale price per pyeong increased 8.6 times more than the previous five years (March 2012 to March 2017), which had a growth rate of 9.3%. These values are based on data surveyed every March. As the gap between sale and jeonse prices widened, the nationwide jeonse price ratio as of February was 68.9%, down 5.7 percentage points from 74.6% in February 2017. The jeonse price ratio refers to the ratio of the jeonse price to the sale price.

The region with the highest increase in average apartment sale price per pyeong was Sejong, where the price surged 177.6% to 27.14 million KRW per pyeong compared to five years ago. Gyeonggi-do saw an increase of 12.92 million KRW per pyeong, surpassing Seoul to rank second with a rise of 105.5%. Seoul’s increase rate was 105.4%, and among the 17 cities and provinces nationwide, Seoul, Gyeonggi, and Sejong all saw their average sale price per pyeong more than double over five years.

The average jeonse price per pyeong in Seoul rose 64.9% to 25.09 million KRW compared to five years ago. Although Seoul’s jeonse price increase rate is higher than the national average (53.6%), the gap between sale and jeonse prices widened from 7.07 million KRW to 20.69 million KRW per pyeong. For example, to purchase a 34-pyeong apartment currently rented under jeonse, one would have needed to pay an additional 240 million KRW five years ago, but now it requires 763 million KRW. This means it has become significantly harder for jeonse tenants in Seoul to buy their own homes.

Sejong was the only region where the average jeonse price per pyeong fell compared to last year. Although Sejong apartment sale prices have recently shown a downward trend, they still increased compared to the same month last year. In February this year, Sejong’s jeonse price ratio was 48.3% (February 2022), the lowest since the establishment of Sejong Special Self-Governing City, falling below half of the sale price.

The region with the largest increase in jeonse price ratio was Ulsan (75.1%). Over the past five years, Ulsan’s average jeonse price per pyeong rose 5.1 percentage points more than its sale price increase. Additionally, Gangwon, Chungbuk, Chungnam, Jeonnam, and Gyeongnam also saw rises in their jeonse price ratios.

Kim Sun-ah, head of sales analysis at Real House, said, “A low jeonse price ratio means there is a lot of bubble in sale prices,” adding, “With recent increases in housing loan interest rates, the burden of loans has grown, so it is more important than ever to make smart choices when looking for a home.”

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