Due to Reverse Jeonse Anxiety... Half of Lease Contracts for Small Apartments in Seoul Are Monthly Rent

Apartments Under 60㎡ Exclusive Area
Monthly Rent Share at 49.9%, Highest Ever

As of May this year, one out of every two lease contracts for small apartments (exclusive area of 60㎡ or less) in Seoul was a monthly rent contract. This is interpreted as a continued preference for monthly rent among the younger generation, who mainly reside in small apartments, due to concerns over jeonse fraud and reverse jeonse anxiety.

[Image source=Yonhap News]

On the 14th, Economic Man Lab, a real estate information provider, reviewed the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system and found that from January to May this year, the total number of jeonse and monthly rent transactions for apartments with an exclusive area of 60㎡ or less in Seoul was 59,324. Among these, jeonse transactions accounted for 29,720, and monthly rent transactions were 29,604, making the monthly rent ratio 49.9%. This is the highest since the Ministry of Land started compiling related statistics in 2011 (based on January to May).

The monthly rent ratio for small apartments in Seoul steadily increased from 25.4% in 2011 to 41.8% in 2016, then declined to 34.6% in 2019. Afterward, it rose again to 36.5% in 2020, 42.8% in 2021, and 48.2% in 2022, showing a trend of increasing monthly rent ratios.

The district with the highest monthly rent ratio for small apartments in Seoul was Geumcheon-gu. As of May this year, Geumcheon-gu recorded 507 jeonse transactions and 1,006 monthly rent transactions for small apartments, translating to a monthly rent ratio of 66.5%.

Other districts with monthly rent ratios exceeding 50% among small apartments include Songpa-gu at 58.7%, Jung-gu 57.3%, Guro-gu 57.2%, Mapo-gu 55.8%, Gangbuk-gu 55.5%, Gwanak-gu 55.4%, Gangnam-gu 55.0%, Jungnang-gu 53.4%, Seodaemun-gu 52.2%, Yangcheon-gu 52.0%, Yongsan-gu 51.7%, and Eunpyeong-gu 51.3%, totaling 13 autonomous districts in Seoul.

Transactions with monthly rent exceeding 1 million KRW also reached a record high. Up to May this year, there were 5,998 monthly rent transactions for small apartments in Seoul with rents over 1 million KRW, the highest since related statistics began in 2011 (January to May basis).

Regarding the monthly rent ratio by exclusive area segments, the figures were ▲30.9% for over 60㎡ to 85㎡ or less, ▲33.2% for over 85㎡ to 102㎡ or less, ▲33.6% for over 102㎡ to 135㎡ or less, and ▲38.5% for over 135㎡.

Hwang Hansol, a research analyst at Economic Man Lab, said, "Although the Bank of Korea has kept the base interest rate unchanged for three consecutive times, leading to a decrease in jeonse loan interest rates, the preference for monthly rent seems to persist among the younger generation mainly residing in small apartments due to concerns over jeonse fraud and reverse jeonse anxiety."

Meanwhile, the highest monthly rent for a small apartment this year was recorded at ‘Hannam The Hill’ located in Hannam-dong, Yongsan-gu, Seoul. On May 1, a monthly rent contract was made for an exclusive area of 59.686㎡ with a jeonse deposit of 24.9 million KRW and a monthly rent of 8.3 million KRW (6th floor).

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