In the First Half of This Year, Monthly Rent Share Surpasses 50% for the First Time Ever

Monthly Rent Accounts for 51.6% of Jeonse and Wolse Transactions
First Time in H1 That Monthly Rent Exceeds Jeonse
Impact of Increased Jeonse Loan Interest Rates and Empty Jeonse Cases

[Asia Economy Reporter Hwang Seoyul] In the housing rental market, the popularity of jeonse (key money deposit lease) is waning while the proportion of monthly rent transactions is increasing. In the first half of this year, the share of monthly rent transactions among all jeonse and wolse (monthly rent) transactions exceeded half.

On the 24th, Real Today, a real estate research firm, analyzed data from the Ministry of Land, Infrastructure and Transport and found that in the first half of this year, monthly rent transactions accounted for 51.6% of all nationwide housing jeonse and wolse transactions. This is an increase of 9.6 percentage points compared to the same period last year and marks the first time that monthly rent transactions have surpassed jeonse transactions in the first half of the year.

The main reason is analyzed to be the increased interest burden that tenants must pay monthly due to the rise in jeonse loan interest rates. According to the financial sector, the interest rates on jeonse loans (guaranteed by the Korea Housing Finance Corporation, 2-year maturity) from the four major commercial banks (KB Kookmin, Shinhan, Hana, and Woori Bank) have surged to between 3.9% and 5.8%. Considering that the rates remained around 2% to 3% until last year, this represents about a twofold increase.

The risk of so-called 'empty can jeonse,' where the loan amount and jeonse deposit exceed the market price, is further accelerating the preference for monthly rent. Since the beginning of this year, the real estate market downturn has led to a surge in empty can jeonse cases, increasing incidents where tenants lose their jeonse deposits. According to the Housing and Urban Guarantee Corporation (HUG), the amount of claims on the jeonse deposit return guarantee insurance reached 340.7 billion KRW in the first half of this year, marking the highest amount ever recorded for a half-year period.

As demand for monthly rent increases, monthly rent prices are also on the rise. According to the Korea Real Estate Board, since February (0.14%), the rate of increase has grown every month, and in June this year, the nationwide average apartment monthly rent price index change rate recorded 0.32%. This is the highest rate of increase since November last year.

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