As Jeonse Prices Soar... 'Gap Investment' Resurfaces

Gap Investment Transaction Volume Varies by Location
Yangcheon, Mapo, Songpa Rise
Nowon, Dobong Decline

Seoul Jeonse Prices Up 0.52% in March
Gap Between Sale and Jeonse Prices Narrows
Increasing Gap Investments with Less Capital

Image sketch related to Jamsil 5 Complex Apartment. Photo by Yongjun Cho jun21@

Recently, as the jeonse prices of apartments in Seoul have risen, gap investment is stirring again. Analysts suggest that among wealthy individuals trying to secure promising apartments in advance, gap investment, which had been quiet for a while due to the aftermath of jeonse fraud, is regaining attention.

According to real estate big data company ‘Asil’ on the 13th, comparing the number of gap investment cases in the first quarter of this year (January to March) with the fourth quarter of last year (October to December), Yangcheon-gu saw an increase of 10 cases (from 15 to 25), Mapo-gu increased by 7 cases (from 23 to 30), and Songpa-gu rose by 5 cases (from 42 to 47). On the other hand, Nowon-gu experienced a decrease of 31 cases (from 65 to 34) during the same period. Dobong-gu also dropped by 7 cases (from 21 to 14).

According to KB Real Estate, jeonse prices in Seoul and the metropolitan area are soaring. A KB Real Estate official stated, "As of March, the jeonse price of apartments in Seoul rose by 0.52% compared to the previous month, and the jeonse price of apartments in the metropolitan area increased by 0.38% compared to the previous month, continuing a nine-month consecutive upward trend since July last year." He added, "The average jeonse price of apartments in Seoul rose by 24.09 million KRW, from 569.81 million KRW in July last year to 593.90 million KRW in March this year."

The official explained that the rise in jeonse prices is "due to a shortage of jeonse supply." As of April 23, the total number of jeonse listings for apartments in Seoul was 30,062, a 27.6% decrease compared to the same period last year. In Incheon, jeonse listings have steadily declined to 7,210 units since April last year’s 11,795 units. Gyeonggi Province also saw a 24.3% decrease to 37,474 units compared to a year ago. As the gap between sale prices and jeonse prices narrows due to rising jeonse prices, ‘gap investment,’ which allows investment with relatively small capital, is gaining traction.

However, even within Seoul, there is a clear divide between areas where future sale price increases are expected and those where they are not. In areas like Yangcheon, Mapo, and Songpa, where sale prices are rising, gap investment has increased along with jeonse prices, but in areas like Nowon and Dobong, where house prices have not risen, gap investment has decreased.

Gap investment is also thriving in prime locations in Gyeonggi Province and Incheon. According to Asil, as of the 13th, the area with the highest increase in gap investment transactions in Incheon over the past three months is Seo-gu, which has many new apartments, with a total of 60 cases from January to March this year. The second place is Yeonsu-gu, where Songdo is located, recording 26 cases. In Gyeonggi Province, Hwaseong-si ranked first with a total of 100 gap investment cases. This is believed to be influenced by the opening of the GTX (Great Train Express) A line in Hwaseong-si.

Kim Hyoseon, Senior Real Estate Specialist at NH Nonghyup Bank, said, "Recently, inquiries about gap investment have increased following the rise in jeonse prices," adding, "There are cases where people who want to actively purchase for investment purposes are trading properties in prime areas such as Gangnam."

Kim also noted, "On the other hand, the market in Gangbuk is mainly for actual users, and sale prices continue to decline, so many buyers purchase with mortgage loans."

A KB Real Estate official analyzed, "Gap investment generally proceeds on the premise that house prices will rise. However, the current market atmosphere is not very active in transactions, and house prices are in an adjustment phase, so it is expected to occur only in limited areas for the time being." He advised, "It is important to identify not only the gap price but also whether there are factors that could stimulate future house prices, and to fully consider risks such as reverse jeonse caused by house price declines to reduce investment risks."

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