10,000 Houses Bought with Loans and Deposits Only... 'Warning for Empty Jeonse'

Over 10,000 Transaction Reports in the First Half of the Year

[Asia Economy Reporters Minyoung Kim and Hyunju Lee] This year, the number of cases where homes were purchased without any personal funds, relying solely on loans and jeonse deposits, has exceeded 10,000. Homes bought through so-called ‘gap investment’ are highly likely to become ‘empty-can jeonse’ where the sum of the loan and deposit exceeds the home price as housing prices fall.

According to real estate transaction report data submitted by Daesik Kang, a member of the People Power Party, from the Korea Real Estate Board on the 6th, the number of reports where the combined amount of mortgage loans and rental deposits on the funding plan exceeded 100% of the home price increased by 41%, from 7,994 cases in 2020 (March to December) to 11,303 cases from January to July this year. Last year, when gap investment was rampant before the housing market cooled, there were 28,264 cases. During the same period, reports where the combined amount of loans and deposits was 80% or more of the home price surged nearly threefold from 38,167 cases in 2020 to 117,279 cases in 2021, and this year totaled 39,065 cases.

The fact that the sum of mortgage loans and rental deposits exceeds the home price means that the homeowner purchased the house without any personal funds, relying only on loans and the tenant’s deposit. Such homes are highly likely to be unable to return the tenant’s deposit fully and on time if housing prices decline, even if the owner sells the house. Typically, homes where the sum of loans and deposits is similar to or exceeds the home price are considered ‘empty-can jeonse’.

Empty-can jeonse is mainly concentrated in the Seoul metropolitan area. In Seoul, reports where the sum of loans and deposits exceeded the home price increased threefold from 2,258 cases in 2020 to 6,990 cases in 2021, and were recorded at 2,455 cases up to July this year. In Incheon, where chasing purchases by people in their 20s and 30s were concentrated last year, the number surged more than fivefold from 1,207 cases in 2020 to 6,523 cases last year. This year, it increased twofold compared to two years ago, reaching 2,593 cases. In Gyeonggi Province, the number rose 2.5 times from 3,288 cases in 2020 to 8,355 cases in 2021, and recorded 3,606 cases this year.

Representative Kang said, "Due to the failure of the Moon Jae-in administration’s real estate policies, housing prices rose sharply, leading to rampant gap investment and increasing concerns about ‘empty-can jeonse.’ If there are areas that require policy supplementation, we will make adjustments to prevent damage to tenants."

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