Jeonse Prices Continue to Decline... Reversed Jeonse Crisis Deepens

Last Week's Jeonse Prices Drop 0.21%... Largest Decline This Year
Sejong Sees 46 Consecutive Weeks of Decline... Incheon Also Plunges 1.24% Last Month
Seoul's Jeonse Price Decline Accelerates... Preference for Banjeonse and Lease Renewal Grows Stronger

Apartment view in Seoul / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Ryu Tae-min] The jeonse market is experiencing severe stagnation due to consecutive interest rate hikes. As the transaction freeze continues, landlords are converting sales into jeonse, causing jeonse listings to accumulate. At the same time, the burden of loan interest is increasing, leading to a growing preference for semi-jeonse and monthly rent, resulting in a supply-demand imbalance. Moreover, the so-called 'reverse jeonse crisis,' where landlords must return the deposit to tenants upon renewing the jeonse contract, is intensifying.

According to the Korea Real Estate Board's weekly apartment price trend survey on the 11th, the nationwide apartment jeonse price fell by 0.21% in the first week of October. This is the largest decline this year, with the cumulative nationwide apartment jeonse price dropping by 1.68% so far this year.

By region, Sejong City's apartment jeonse prices have fallen by a total of 12.13% this year, marking the largest decline among the 17 cities and provinces nationwide. In 2020, when discussions about relocating the administrative capital accelerated, apartment jeonse prices in Sejong soared by 60.6%, recording the highest increase nationwide. However, since then, the relocation progress has stalled, and external factors such as interest rate hikes have contributed to a continuous decline for 46 consecutive weeks since the fourth week of November last year.

Incheon, one of the hottest real estate markets last year, is also on a downward trend. Incheon apartment jeonse prices have fallen by 5.01% this year, contrasting with the 14.33% increase last year. Particularly last month, prices dropped by 1.24% in just one month, showing a sharp increase in the rate of decline.

Seoul is also seeing an acceleration in jeonse price declines. The weekly apartment jeonse price change rate in Seoul recorded -0.20% in the first week of October, marking the largest drop this year. Until August, the weekly jeonse price decline rate in Seoul was less than 0.10%, indicating a small decrease, but the downward trend has deepened since last month. The cumulative decline this year stands at -1.43%. Notably, not only in non-Gangnam areas but also in Gangnam, where high-priced jeonse is common, the overall inventory is piling up, and there are increasing jeonse listings cheaper than prices two years ago. Following the implementation of the two rental laws in August 2020, including the right to request contract renewal and the rent ceiling system, jeonse prices surged but have now fully returned the increase in two years, triggering a full-fledged reverse jeonse crisis.

The Korea Real Estate Board analyzed, "With the increased interest burden on jeonse loans due to interest rate hikes, there is a strong preference for semi-jeonse or renewal contracts. As demand for new jeonse decreases, urgent sale transactions are increasing, and listing prices are falling."

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