Real Estate Market, Growing Uncertainty... From Sale to Jeonse, From Jeonse to Monthly Rent

Seoul Apartment Sales Down 72% Year-on-Year
Meanwhile, Jeonse and Monthly Rent Transactions Increase by 12.91%
"Even with Financial Capacity, Buyers Hesitate"
Monthly Rent Demand Growth About 10 Times Higher Than Jeonse
Interest Rate Hikes Have the Biggest Impact

[Asia Economy Reporter Hwang Seoyul] As uncertainty in the real estate market grows, the number of prospective buyers turning to rental options instead of purchases is increasing. While the number of sales transactions showed a negative growth rate compared to the previous year, demand for rental leases has been steadily rising. In particular, within the rental market, the increase in monthly rent is more pronounced than that of jeonse (long-term deposit lease) due to interest rate hikes.

According to an analysis of the Seoul Real Estate Information Plaza on the 1st, the number of apartment sales transactions in Seoul from January to July this year (as of the previous day) was 8,558, a 71.95% decrease compared to the same period last year (30,513 transactions). By district, Seongbuk-gu showed the largest decline at -80.83%, followed by Dobong-gu (-80.66%), Nowon-gu (-79.57%), Gangbuk-gu (-79.42%), and Yangcheon-gu (-77.92%). Even Jongno-gu, which had the smallest decrease among the 25 districts, saw a 57.35% drop compared to the previous year, reducing transaction volume by more than half.

On the other hand, with sales prices entering a downward trend, rental demand is increasing as prospective buyers adopt a wait-and-see approach. During the same period this year, rental transactions (jeonse and monthly rent combined) totaled 131,021, a 12.91% increase compared to 116,043 transactions in the previous year. Gangbuk-gu recorded the highest increase in rental transactions at 48.87%. The total number of apartment transactions, combining sales and rentals from January to July this year, was 139,579, not significantly different from 146,556 in the same period last year, but the changes in the sales and rental markets are distinct.

The market views that as sales price volatility increases, actual demand buyers are moving into the rental market. A representative from real estate agency A in Suyu-dong, Gangbuk-gu, said, "Even if people want to buy a home, they sometimes choose rental contracts instead of sales due to concerns that prices might fall further." A representative from real estate agency B in Hagye-dong, Nowon-gu, also stated, "There are cases where people come to rent jeonse without taking out jeonse loans," adding, "This means they have the capacity to buy a house but are not even considering purchasing."

In the rental market, concerns over interest rate hikes have led to a rise in monthly rent demand at a rate about 10 times higher than that of jeonse. From January to July this year, jeonse transactions numbered 77,057, a slight increase of 3.83% compared to 74,213 in the same period last year. In contrast, monthly rent transactions rose from 41,813 to 53,941, a 29.01% increase. A representative from real estate agency C in Suyu-dong, Gangbuk-gu, said, "The biggest reason rental demandors choose monthly rent is due to interest rate hikes."

Songpa-gu (9,993 transactions) and Gangnam-gu (9,593 transactions), which ranked first and second in total rental transactions among all districts last year, also show this trend prominently. Jeonse transactions in Songpa-gu decreased by 2.71% compared to the previous year, but monthly rent transactions increased by 39.32%. In Gangnam-gu, the monthly rent transaction growth rate (34.98%) was higher than that of jeonse (12.31%) compared to the previous year. A representative from real estate agency D in Samseong-dong, Gangnam-gu, said, "In complexes where rental demand is usually high, there are cases of waiting due to lack of supply, but these days, the waiting list for monthly rent is somewhat longer."

Experts say that for the sales market to recover, uncertainty must first be resolved. Kim Hyoseon, Senior Real Estate Advisor at NH Nonghyup Bank, explained, "For prospective buyers to jump into homeownership, there needs to be a perception that prices are not at their peak," adding, "However, since the timing cannot be predicted, the current situation after a sharp price increase is one where a decline is expected." She further stated, "For sales demand to increase, interest rate hikes must stop, and the measures announced by the government on the 16th as part of real estate policies need to be concretized."

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