Jeonse Prices Halved in Mapo New Apartments... Gaepo, Gangnam Listings Also at 600 Million Won

"High Interest Rates Increase Preference for Monthly Rent"… One Month After Move-in, MaPo The Classy Jeonse Listings Accumulate
Nearby MaRaepu Faces Reverse Jeonse Crisis… Small Units Drop to 500 Million KRW Range
3,000 Large Complex Units to Move in Gangnam in February Next Year
"If Strong Demand Gangnam Jeonse Wavers, Overall Market Instability Will Grow"

[Image source=Yonhap News]

[Asia Economy Reporter Onyu Lim] As new large-scale apartment complexes continue to be occupied amid an era favoring monthly rent due to high interest rates, the jeonse shock in Seoul is intensifying. Landlords who fail to find tenants are rushing to lower jeonse prices, fueling reverse jeonse difficulties in nearby complexes. With a significant volume of large-scale complexes scheduled to move in next year in the Gangnam area, it is expected that the jeonse market will experience a major upheaval.

According to the real estate brokerage industry on the 27th, Mapo The Classy (1,419 households) in Ahyeon-dong, Mapo-gu, Seoul, which began occupancy at the end of last month, is still struggling to find tenants. The total number of jeonse listings for this apartment, compiled by the real estate big data platform Asil, is 671, showing almost no change compared to just before occupancy (682 listings). A representative from Ahyeon-dong A Real Estate Agency (hereafter, the agency) said, "Due to the use of the contract renewal right, new rental demand is low, and with rising interest rates, while there are some inquiries for semi-jeonse or monthly rent, jeonse with high interest burdens is not being transacted." Landlords who must pay the remaining balance by early February next year are reluctantly lowering prices to list their properties. The asking price for a 59㎡ (exclusive area) unit is set at 500 million KRW, and for an 84㎡ unit, it starts from 650 million KRW.

This low-price competition among landlords of new large-scale complexes appears to be pulling down jeonse prices in nearby older apartments as well. For example, in the adjacent complex Mapo Raemian Prugio, the asking price for a 59.96㎡ unit, which was traded at 950 million KRW last April, has dropped to as low as 550 million KRW, nearly half the previous price.

The situation is similar for Hills State Hong Eun Forest (623 households) in Seoul, which began occupancy last month. Currently, there are 293 jeonse listings. The asking price for a low-floor 59㎡ jeonse unit has fallen to 300 million KRW, and for an 84㎡ unit, down to 410 million KRW. Nearby apartments are also facing reverse jeonse difficulties. For instance, the adjacent Baekryeonsan Hills State 3rd complex has a lowest asking price of 330 million KRW for a 59㎡ unit, which is 170 million KRW lower than the actual transaction price of 500 million KRW two years ago.

The problem is that the jeonse shock triggered by new large-scale complexes is expected to worsen next year, especially in the Gangnam area of Seoul. According to Real Estate R114, 6,371 households in Gangnam-gu are scheduled to move in next year. This is about eight times the volume of this year's occupancy (802 households), likely causing significant ripple effects in the nearby jeonse market.

In fact, the Gaepo Xi The Residence (3,375 households) in Gaepo-dong, Gangnam-gu, Seoul, which will be occupied in February next year, has already ignited a low-price jeonse competition. For a 59㎡ unit, the asking price was around 1.3 billion KRW in early last month, but now listings are available at a minimum of 600 million KRW.

Experts express concern that if Gangnam, which serves as a leading indicator in the real estate market during a period of house price decline due to high interest rates, starts to falter, the impact will be substantial. Yang Ji-young, head of R&C Research Institute, said, "If even Gangnam, a region with solid actual demand, sees jeonse prices fall, the entire jeonse market will become unstable," adding, "Fear could spread to the sales market, which is supported by the jeonse market." Lim Byung-chul, research team leader at Real Estate R114, said, "Even if jeonse prices fall at the same rate in both Gangbuk and Gangnam, the larger price drop in Gangnam could cause a greater shock to the market," and "If leveraging to purchase a home becomes difficult, it will also affect the sales market."

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