Jeonse Deposit Due Within One Year Hits Record High of 300 Trillion Won... Risk of Non-Return Grows Larger

From the second half of this year to the first half of next year, the total amount of jeonse deposits with expiring contracts is estimated to exceed approximately 300 trillion won. Even assuming that the entire deposit amount does not need to be returned all at once within one year, concerns are rising that the risk of non-return of jeonse deposits could increase, considering recent nationwide apartment jeonse price declines and decreases in total jeonse transaction deposits.

[Image source=Yonhap News]

Highest since 2011 data compilation... Jeonse deposit amount expiring within one year equals 40.3% of mortgage loans

On the 19th, Zigbang analyzed the nationwide total jeonse transaction amount assuming a two-year jeonse contract period and found that the total jeonse transaction amount for the second half of 2021, when contracts expire in the second half of this year, was 149.08 trillion won. Adding the 153.09 trillion won of jeonse transactions expiring in the first half of 2022, the total jeonse deposit amount with contracts expiring nationwide over the next year is estimated at 300 trillion won, marking the highest transaction amount since the disclosure of related actual transaction prices in 2011. The scale of jeonse deposits accounts for 16.3% of household credit of 1,853.9 trillion won as of the first quarter of 2023, and 40.3% of mortgage loans totaling 750.2 trillion won.

By housing type, the total jeonse transaction amount from the second half of 2021 to the first half of 2022 shows apartments at 228.38 trillion won, accounting for 75.6% of the total jeonse transaction amount. Next are multi-family and row houses at 33.42 trillion won (11.1%), detached houses at 22.81 trillion won (7.5%), and officetels at 17.56 trillion won (5.8%). Although non-apartment housing accounts for one-quarter of total jeonse transactions, experts advise caution as cases of non-returned jeonse deposits are mainly concentrated in non-apartment housing.

By region, the total jeonse deposit amount with contracts expiring within the next year is highest in Seoul at 118.68 trillion won, followed by Gyeonggi Province at 98.93 trillion won, and Incheon at 15.82 trillion won, with 233.43 trillion won (77.3%) concentrated in the metropolitan area.

Outside the metropolitan area, Busan’s expiring jeonse deposit amount is 12.17 trillion won, the only local region exceeding 10 trillion won within the next year. Gyeongsangnam-do is at 7.77 trillion won, and Ulsan at 2.8 trillion won, with the Busan-Ulsan-Gyeongsangnam-do (Bu-Ul-Gyeong) area expected to have 22.75 trillion won (7.5%) in expiring deposits. The Chungcheong region’s deposits are estimated at 18.84 trillion won (6.2%) with Daejeon at 6.32 trillion won, Chungnam at 5.56 trillion won, Chungbuk at 4.21 trillion won, and Sejong at 2.75 trillion won.

Total Amount Trend of Nationwide Jeonse Housing Transactions (Provided by Zigbang)

Jeonse deposit amount expiring in Seoul’s Gangnam 3 districts totals 13.21 trillion won, exceeding any single local city or province

The top districts and counties with the highest total jeonse deposits expected to expire from the second half of 2023 to the first half of 2024 are Seoul’s Gangnam 3 districts along with Gangseo-gu and Gangdong-gu. Gangnam-gu leads with 13.21 trillion won, followed by Songpa-gu at 11.6 trillion won, and Seocho-gu at 9.25 trillion won. The Gangnam 3 districts face expiring jeonse deposits exceeding those of any single local city or province outside Seoul, Gyeonggi, Incheon, and Busan, raising concerns about reverse jeonse. Additionally, Gangseo-gu and Gangdong-gu are expected to have expiring deposits of 7.47 trillion won and 6.55 trillion won, respectively. Gangseo-gu is one of the areas heavily affected by jeonse fraud.

Concerns are raised that the risk of non-return of jeonse deposits could increase further if jeonse prices decline further. Ham Young-jin, head of Zigbang Big Data Lab, said, "Although the entire 300 trillion won scale of jeonse deposits will not be returned all at once within one year, considering the decrease in total jeonse transaction deposits and the 13.5% drop in nationwide apartment jeonse prices compared to two years ago, the risk of non-return of jeonse deposits could increase. Since the largest scale of jeonse deposit contract expirations is expected in the second half of this year and the first half of next year, it is necessary to prepare by assessing landlords’ repayment ability."

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