Gangnam School District Apartments Eunma and Dogok Rexle Also See Lease Transactions Slowdown

View of Eunma Apartment area, Daechi-dong, Gangnam-gu, Seoul / Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Noh Kyung-jo] During the summer vacation period, the jeonse (long-term lease) transactions of apartments in major school districts in the Gangnam area of Seoul are not as active as in previous years. Although Eonma Apartment in Daechi-dong, Gangnam-gu, and Dogok Rexle in Dogok-dong maintain the highest transaction volumes in their respective neighborhoods, the absolute numbers have decreased. Even the top-tier school district complexes located near subway stations seem to be affected by the rising interest rate environment.

According to the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system and Asia Real Estate (Asil) as of the 26th, a total of 35 jeonse transactions were made at Dogok Rexle from June 1 to the 25th of this month. Within Dogok-dong, this is the highest transaction volume, about twice as many as the second place Gaepo Hanshin (18 transactions) and third place Dogok Samsung Raemian (17 transactions). However, compared to the same month in 2020 (62 transactions) and 2021 (52 transactions), the figure is significantly lower.

Eonma Apartment, known for having the largest number of so-called 'Daejeon-jok' (people who rent in Daechi-dong for their children's education), recorded 84 jeonse transactions during this period, holding steady compared to 88 transactions in the same period last year. However, the number of transactions decreased over time, with 42 in June, 27 in July, and 15 in August.

Both complexes have very few sales transactions. While some buyers purchase homes with mid- to long-term plans for their young children’s education, most tend to look for jeonse or monthly rent options considering the appropriate age range. Eonma Apartment also faces redevelopment issues. In fact, since June, the number of sales transactions has been limited to 7 at Dogok Rexle and 2 at Eonma Apartment.

Real estate agents attribute this summer’s sluggish jeonse and monthly rent transactions to tightened loan conditions and rising interest rates. While landlords have accumulated rental properties instead of urgent sales during the real estate market slowdown, tenants’ financial capacity and preferences have declined. With jeonse loan interest rates surpassing 6% last month, the Bank of Korea raised the base interest rate by 0.25 percentage points to an annual 2.50% as of yesterday.

A representative from a real estate agency in Daechi-dong said, "There are many lease renewals, and demand has somewhat decreased due to higher interest rates, but it’s not that there are no listings." He added, "Because excellent university entrance outcomes have attracted parents from all over the country and students who are 'serious about studying,' a virtuous cycle has continued for a long time, so there is no problem in the big picture."

Perhaps for this reason, some listings have high asking prices. Another real estate agent explained, "For jeonse at Eonma Apartment, you need to pay at least 800 million KRW for a 76㎡ unit and over 900 million KRW for an 84㎡ unit," adding, "Both listings and demand increase during the winter vacation before the new school year, so it is still a matter to watch."

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