Seoul Jeonse Drops Most in 3 Years 7 Months... "Gap Investment, Move-in Impact Raise Concerns of Reverse Jeonse in Certain Areas"

Real Estate R114 Weekly Metropolitan Area Real Estate Trends

[Asia Economy Reporter Kim Hyemin] Seoul apartment jeonse prices have recorded the largest drop in over 3 years and 7 months. This is due to a slowdown in new demand caused by the shift to monthly rent and the use of renewal rights, leading to continued price declines mainly in large complexes where listings are accumulating. There is a possibility of an increase in reverse jeonse, especially in outer metropolitan areas where gap investments were common in the past or where apartment move-ins have had an impact, so caution is required. Reverse jeonse refers to a situation where the jeonse market price falls below the contract price, making it difficult for landlords to return the deposit.

According to Real Estate R114 on the 22nd, the Seoul apartment sale price in the third week of October fell by 0.06% compared to the previous week. Reconstruction apartments fell by 0.12%, and general apartments fell by 0.05%, increasing the rate of decline compared to the previous week.

By region, the decline was significant mainly in large complexes where listings are accumulating. Areas such as ▲Gwanak (-0.25%) ▲Dobong (-0.25%) ▲Gangdong (-0.21%) ▲Nowon (-0.15%) ▲Seongbuk (-0.15%) ▲Songpa (-0.13%) ▲Guro (-0.05%) fell.

New towns fell by 0.02% compared to the previous week. By region, ▲Gimpo Hangang (-0.12%) ▲Pyeongchon (-0.04%) ▲Gwanggyo (-0.04%) ▲Sanbon (-0.03%) ▲Jungdong (-0.03%) ▲Bundang (-0.02%) declined.

Gyeonggi and Incheon fell by 0.04% compared to the previous week. By region, the order of decline was ▲Incheon (-0.08%) ▲Bucheon (-0.08%) ▲Anyang (-0.08%) ▲Suwon (-0.07%) ▲Uijeongbu (-0.05%) ▲Gimpo (-0.03%) ▲Yongin (-0.03%).

The jeonse market showed a clear preference for monthly rent due to increased loan interest burdens and concerns about "empty jeonse" (risk of deposit loss), with notable declines in areas affected by move-ins and large complexes.

Seoul fell by 0.1% compared to the previous week, marking the largest drop since March 2019 (-0.11%). By region, declines were seen in ▲Gangdong (-0.27%) ▲Dobong (-0.26%) ▲Guro (-0.25%) ▲Gwanak (-0.24%) ▲Gwangjin (-0.23%) ▲Yongsan (-0.19%) ▲Seongbuk (-0.17%). New towns and Gyeonggi·Incheon each fell by 0.04%.

Yeo Kyung-hee, Senior Researcher at Real Estate R114, said, "Following the Bank of Korea's big step rate hike, the real estate market contraction is intensifying," adding, "The Seoul metropolitan apartment market has frozen to the extent that there was not a single area where sale or jeonse prices rose last week."

Senior Researcher Yeo added, "Interest rate hikes are faster and steeper than expected, and the outlook that they will continue for a considerable period is also encouraging buyers to hold back," and said, "The impact on the housing market is expected to be limited."

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