Monthly Rent Surpasses Jeonse... Increasing Housing Cost Burden for Ordinary Citizens

50.4% of Lease Transactions in April Were Monthly Rent

First Time Monthly Rent Surpasses Jeonse Since 2011 Statistics

Seoul Average 1.25 Million KRW, Monthly Rent Prices Also at Record High

[Asia Economy Reporter Kim Min-young] Last month, the proportion of monthly rent transactions nationwide exceeded half, surpassing the volume of Jeonse transactions for the first time. Due to the implementation of the Lease Protection Act (right to request contract renewal and rent ceiling system), Jeonse prices surged sharply, combined with loan regulations and interest rate hikes, accelerating the trend of 'Jeonse turning into monthly rent.' With monthly rent prices soaring alongside rising food prices, the financial burden on low-income households is increasing.

According to the Ministry of Land, Infrastructure and Transport on the 31st, the total number of Jeonse and monthly rent transactions nationwide in April was 258,118, of which monthly rent transactions accounted for 130,295 (50.4%), surpassing Jeonse transactions at 128,023. This is the first time since the government began compiling related statistics in 2011 that the share of monthly rent transactions in the lease market exceeded 50% and overtook Jeonse transactions.

Based on cumulative transactions from January to April this year, the share of monthly rent in lease transactions was 48.7%, up 6.5 percentage points from 42.2% during the same period last year. Compared to the five-year average of 41.6%, the monthly rent share was 7.1 percentage points higher.

The Ministry of Land, Infrastructure and Transport cited the new Lease Protection Act, implemented in July 2020, as the reason for the steady increase in the share of monthly rent. The act increased the number of tenants exercising the right to contract renewal, causing Jeonse listings to be locked up. Landlords, mindful of the 5% rule, demanded the entire four years’ worth of deposit increases at once, pushing Jeonse prices up and accelerating the trend of Jeonse turning into monthly rent. Additionally, this year, strengthened loan regulations and rising interest rates have increased financial burdens.

Monthly rent prices are also soaring. According to the Korea Real Estate Board, the average monthly rent for apartments in Seoul in April was 1,254,000 KRW, a record high. Similarly, the nationwide average monthly rent in April was 816,000 KRW, also at a record level. The May Seoul Monthly Rent Index (KB Real Estate) reached 102.3, the highest since 2016. With recent rapid inflation increasing living expenses, rising monthly rent prices are further burdening low-income households.

Experts expect the trend of Jeonse turning into monthly rent to continue this year. Kim Hyo-sun, Senior Real Estate Advisor at NH Nonghyup Bank, said, "Due to a combination of factors such as reduced housing supply in Seoul, interest rate hikes, decreased gap investment demand, and loan regulations, landlords and tenants are quickly agreeing to switch from Jeonse to monthly rent, and this trend is expected to accelerate in the second half of the year. Especially in districts like Gwanak-gu, Jung-gu, and Jongno-gu in Seoul, the share of monthly rent is increasing, which is raising housing cost burdens for vulnerable residents."

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