Provincial Jeonse Prices Continue to Rise Unabated... 'Signs of Revival' vs. 'Caution Against Optimism' [Real Estate AtoZ]

As apartment jeonse (long-term deposit lease) prices in provincial areas continue to rise steadily, optimism about next year’s local real estate market is spreading. Analysts say that clear signs of recovery are emerging, especially in regions where jeonse prices are increasing.

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According to the Korea Real Estate Board on December 4, the provincial jeonse market has entered an upward trend under the current administration. As of the fourth week of November, jeonse prices have risen for 17 consecutive weeks in the five major provincial metropolitan cities, for 10 weeks in the eight provincial regions, and for 13 weeks across all provincial areas. Among recent weekly increases, Busan (0.09%) and Ulsan (0.12%) stood out, while Sejong (0.30%), Jinju (0.20%), Seosan (0.20%), and Jeonju (0.12%) also showed strong gains.

Kim Seungjun and Ha Minho, researchers at Hana Securities, analyzed, “The provincial market is not declining as a whole; rather, in many areas, housing costs are the first to move depending on supply and demand conditions. There is a high possibility that rising prices in provincial areas will become a key theme next year.” They added, “If sales prices in metropolitan cities begin to show a consistent upward trend, this may be the beginning of a new cycle.” Yoon Sumin, a real estate expert at NH Nonghyup Bank, also commented, “Provincial markets are known for jeonse and sales prices moving in nearly identical cycles. In places with a clear base of real demand, such as Busan, Ulsan, and Suseong District in Daegu, the market sentiment has already improved, and next year, the upward trend in these areas is likely to become even more pronounced.”

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The parallel movement of jeonse and sales prices is also evident in the statistics. Since turning upward in the fourth week of August, provincial jeonse prices have risen for 10 consecutive weeks. Starting in November, provincial apartment sales prices ended a “100-week decline” and also shifted to an upward trend, which has continued since. For example, in Busan, the sales price decline ended in October after more than three years, but jeonse prices had already begun to rise about six months earlier, in April.

On the other hand, some point out that it is too early to be optimistic about local housing prices. Because expectations for capital gains are weak, many opt for jeonse rather than buying, making the rise in jeonse prices particularly noticeable. Yang Jiyeong, a senior expert at Shinhan Premier Pathfinder, noted, “It is premature to conclude that the entire provincial market is recovering based solely on rising jeonse prices. In the past, short-term rebounds in provincial areas have often failed to lead to long-term increases, and there are structural risks, such as the difficulty of timing a sale if the market becomes unstable.”

Experts generally agree that next year’s provincial market will show a selective recovery. Yang predicted, “Areas with a solid base of real demand, such as Haeundae District in Busan or Suseong District in Daegu, will definitely see a better market than this year.” Yoon also forecast, “The recovery centered on metropolitan cities, school districts, and key living zones will be stronger than this year, but polarization and differentiation among local regions are likely to intensify.”

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