Accumulating Jeonse Supply in Residential Complexes... Concerns Over 'Reverse Jeonse Crisis' in Seoul Too

Seoul to House 8,158 Households by Year-End... Jeonse Listings Increasing
"Regional Differences Exist, but Seoul Also Faces Reverse Jeonse Trend"

Perspective view of Raemian Elinity in Yongdu-dong, Dongdaemun-gu, Seoul [Photo by Samsung C&T]

[Asia Economy Reporter Noh Kyung-jo] As Seoul apartment jeonse prices have fallen for 11 consecutive weeks, landlords are increasingly concerned about the scheduled move-in volumes through the end of this year. The jeonse market is experiencing a 'reverse jeonse crisis' due to continuous interest rate hikes.

According to real estate big data company Asil on the 27th, Raemian Elinity in Yongdu-dong, Dongdaemun-gu, which will have move-ins starting from the 31st of this month, has more than half of its total 1,048 households?534 units?listed as jeonse and monthly rent properties as of the previous day. There are 307 jeonse and 227 monthly rent units respectively.

Banpo Reul in Jamwon-dong, Seocho-gu, with the same move-in date and 596 households, has a total of 600 jeonse and monthly rent units (315 jeonse units and 285 monthly rent units), exceeding the total number of households. This discrepancy is interpreted as some properties being listed simultaneously for sale, jeonse, and monthly rent.

Before move-in, jeonse units are often put on the market by buyers who find it difficult to pay the remaining balance. The problem is that during the period of rising interest rates, more tenants are opting for monthly rent rather than taking out jeonse loans.

This phenomenon is expected to intensify for the time being. The Bank of Korea raised the base interest rate from 2.25% to 2.50% per annum on the 25th, marking the first-ever four consecutive rate hikes. The upward trend may continue next year. Jeonse loan interest rates surpassed 6% annually last month.

Kim Gyu-jung, head of the Asset Succession Research Institute at Korea Investment & Securities, said, "There will be regional differences depending on the move-in volumes, but the overall trend due to the interest rate hikes is moving toward a reverse jeonse crisis. However, since jeonse is being replaced by monthly rent, we need to observe how much further jeonse prices will fall."

In Seoul, a total of 8,158 households are scheduled to move in by the end of the year. Besides Raemian Elinity, large complexes with over 1,000 households include Hillstate New Foret in Sillim-dong, Gwanak-gu (1,143 households), and Mapo The Classy in Ahyeon-dong, Mapo-gu (1,419 households). Their move-in dates are scheduled for September and December, respectively. In Hongje-dong, Seodaemun-gu, Seodaemun Prugio Central Park, with 832 households, will begin move-ins in October.

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