"With This Year's Housing Supply Flooding In, What Can Be Done?"... Incheon's Cry Over Jeonse Drop from 400 Million to 200 Million

Preference for Monthly Rent Due to High Interest Rates Expands 'Reverse Jeonse Crisis'
About 15,000 Jeonse Listings Accumulate in Incheon
Over 40,000 Households Scheduled for Move-in Supply This Year

[Asia Economy Reporter Kwak Minjae] As the preference for monthly rent spreads amid high interest rates, the phenomenon of 'reverse jeonse crisis' is expanding. The situation in the Incheon area, among the metropolitan areas, is particularly serious. With the continued decline in jeonse prices and a large-scale supply of new housing scheduled for this year, there are even places where jeonse prices have been halved in just over a year.

A panoramic view of Geomdan New Town, Seo-gu, Incheon.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 4th, the jeonse price of 'Geomdan Hillstate 6th Phase' (exclusive area 84.98㎡) in Dangha-dong, Seo-gu, Incheon, dropped nearly half from 400 million KRW in August 2021 to 200 million KRW last month. The head of a real estate agency in Dangha-dong said, "The market price of 400 million KRW recently approached 200 million KRW," adding, "Due to the large supply of new housing in Geomdan New Town, landlords have no choice but to lower their asking prices."

The jeonse prices of new apartments in Geomdan New Town, which began occupancy in July last year, are also falling. For example, the 'Geomdan Sinan Insville Urban First' in Dangha-dong, Seo-gu, Incheon, with an exclusive area of 84㎡, found tenants at 200 million KRW on the 28th of last month. This price is 100 million KRW lower than the peak price of 300 million KRW recorded in June last year.

This appears to be due to the sharp rise in interest rates causing jeonse loan interest to surpass monthly rent, leading to a backlog of jeonse listings. In fact, the backlog of listings in Incheon is severe. According to the real estate big data company Asil, the recent number of jeonse apartment listings in Incheon reached about 15,000. This is the largest scale since tracking jeonse listings began in 2020. Compared to the approximately 7,000 listings per month recorded until May, this nearly doubled in just eight months.

Jeonse prices in Incheon are also falling uniformly. According to the weekly apartment price trend announced by the Korea Real Estate Board (as of the 26th), the jeonse price change rate in Incheon recorded -1.28%.

Following last year, more than 40,000 households are expected to move in this year as well, which is likely to further deepen the reverse jeonse crisis in Incheon. According to Real Estate R114, more than 40,000 households were supplied consecutively last year (42,515 households) and this year (45,169 households). In particular, the planned supply volume in Incheon this year is expected to be the largest since Real Estate R114 began surveys in 2000.

Yeokyunghee, Senior Researcher of the Research Team at Real Estate R114, said, "In areas where move-in volumes are concentrated, jeonse prices have dropped sharply, increasing the possibility of an expanded reverse jeonse crisis," adding, "Until jeonse loan interest rates fall below monthly rent again, it will be difficult to resolve the reverse jeonse crisis."

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