Move-in Cliff... Renting in Seoul Becomes Much Tougher

Temperature Gap in Second Half Metropolitan Area Housing Supply
Gyeonggi Supply Doubles While Seoul Drops 40%
"Increase in Jeonse Refugees Leaving Seoul Possible"

[Asia Economy Reporter Kim Hyemin] A 'move-in cliff' is forecasted in the Seoul apartment market in the second half of this year. With the volume of move-ins decreasing by more than 40% compared to a year ago, this adds another negative factor to the jeonse market following the Lease 3 Act. On the other hand, the volume of move-ins in the Gyeonggi area nearly doubled during the same period, raising concerns that the number of 'jeonse refugees' forced to leave Seoul may increase.

According to Real Estate R114 on the 10th, the volume of apartment move-ins in Seoul for the second half of this year is projected to be 8,326 households (including scheduled). Considering that the first half of this year (13,766 households) and the second half of last year (14,095 households) were at the level of 13,000 to 14,000 households, this represents a decrease of more than 40%. Compared to the second half of 2020, two years ago (22,925 households), it is a reduction of more than 60%. On a half-year basis, it is expected to be the lowest volume of move-ins in six years and six months since the first half of 2016.

The volume of large complexes with over 1,000 households is limited to only two locations. Raemian Elinity in Yongdu-dong, Dongdaemun-gu (1,048 households) will begin move-ins in August, and Gocheok I-Park, a publicly supported private rental housing in Gocheok-dong, Guro-gu (1,459 households) will start in October. Typically, the jeonse market has partially resolved supply shortages through new apartment move-ins, and the effect is greater when large volumes are released at once. However, experts point out that this time, the volume itself has drastically decreased and the volume of large complexes is minimal, making it difficult to expect a compensatory effect for the jeonse shortage.

Moreover, with the Lease Act entering its second year this August, generating new jeonse demand, combined with relocation demand from redevelopment projects, negative factors in the Seoul jeonse market are increasing. In fact, in the second half of this year, about 2,000 union members are preparing to relocate from areas such as Heukseok 9 District in Dongjak-gu, Noryangjin 8 District, and Bangbae Samik Apartments in Seocho-gu. It is estimated that about 15,000 tenants in Seoul alone will need to move from renewals to new contracts after August this year.

As living on jeonse in Seoul becomes more difficult, it is expected that more people will choose to leave Seoul for Gyeonggi and Incheon. Unlike Seoul, the volume of move-ins in these areas is also increasing compared to the average year in the second half of this year. The number of new apartments moving in the Gyeonggi area in the second half of this year is 72,652 households, nearly double the previous quarter (39,337 households). This is the highest level in two years since the second half of 2020 (76,674 households). In Incheon, the volume of move-ins has also significantly increased to 19,425 households this year. Kyunghee Yeo, Senior Researcher at Real Estate R114, said, "Most jeonse demand tends to move within nearby areas," but added, "If the jeonse shortage in Seoul worsens, more people may consider relocating to areas like Gyeonggi, where prices are expected to stabilize relatively downward."

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