Seoul Officetel Jeonse and Wolse Prices Rise... MZ Generation "Spending Over 25% of Salary on Housing Costs"

Seoul Officetel Jeonse Prices
0.42% Increase Compared to Previous Quarter
Higher Than Nationwide Index Change Rate
Main Demand Group: 2030 Generation
Youth Housing Issues Deepen

[Asia Economy Reporter Hwang Seoyul] Park, a 24-year-old young worker, recently gave up looking for a jeonse (long-term deposit lease) officetel in Yeongdeungpo-gu, Seoul. The jeonse prices surged so much that even with a loan, it was unaffordable. Moreover, the monthly rent also skyrocketed, so the alternative plan of using the 30 million won support from his parents as a deposit and finding a monthly rent of about 550,000 won also fell through. In the end, Park had no choice but to rent an officetel with a 10 million won deposit, 630,000 won monthly rent, and 88,000 won maintenance fee. He lamented, "More than a quarter of my monthly salary goes to rent every month."

With the rise in jeonse prices and monthly rents for officetels in Seoul, a red light has turned on regarding housing costs for young people lacking sufficient capital.

According to the Korea Real Estate Board on the 19th, the jeonse price of officetels in Seoul in the second quarter rose by 0.42% compared to the previous quarter. Although the increase rate decreased compared to the previous quarter's change rate (0.60%), it remains higher than the national index change rate (0.19%). Last month, the average jeonse price for officetels in Seoul was 202.7 million won, about 6 million won higher than the same month last year (203.15 million won).

The main demand group for officetels is mostly people in their 20s and 30s who lack financial capacity. However, the rapid rise in jeonse prices is worsening the housing problem for young people. According to the Korea Construction Industry Research Institute's report "The Era of One Million Officetels: Achievements and Challenges" released in March, 62.3% of all officetel households are in their 20s and 30s. The proportion of middle- and low-income households with a monthly average total current income of 3 million won or less is 67.2%, second only to single-family houses (73.9%).

With the overlapping interest rate hikes, cases of signing quasi-jeonse contracts equivalent to the increase in jeonse prices are also emerging. In the case of officetels in Mapo-gu, 3 out of 4 lease contracts reported this month were quasi-jeonse contracts. Although contract amounts vary by area, the deposit alone ranges from 180 million to 200 million won, comparable to the jeonse amount.

Especially, as interest rate hikes make jeonse loans burdensome, finding monthly rent as an alternative is not easy either. The monthly rent price index rose by 0.45% in the second quarter compared to the previous quarter, expanding from the first quarter's change rate (0.29%). For example, officetels in Jung-gu (25.58㎡) that last June were rented with a 10 million won deposit and monthly rent of 780,000 to 810,000 won were contracted last month on the same floor with the same deposit but 20,000 to 30,000 won higher monthly rent.

Experts point out that to solve the housing problem for young people, housing supply that moves separately from market prices is necessary. Professor Kim Junhyung of Myongji University's Department of Real Estate said, "Although demand support projects such as youth monthly rent support are underway, without supply measures, this leads to price increases," adding, "In the long term, it is necessary to increase the supply of public and private rental housing with rent caps."

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