'Gwisinsun Jeonse' Average Surpasses 400 Million Won in the Seoul Metropolitan Area

Aftermath of New Lease Law: Listings Locked, Jeonse Prices Raised in Advance
From 300 Million to 350 Million in 3 Years 10 Months, From 350 Million to 400 Million in 4 Months
Hanam-si Sees Over 55% Surge in a Year... Numerous Complexes with Over 200 Million Increase

[Asia Economy Reporter Onyu Lim] The aftershocks of the new Housing Lease Protection Act, which includes the right to request contract renewal and the cap on rent increases for Jeonse and monthly rent, are showing no signs of subsiding. With the shortage of Jeonse listings unresolved and an increasing number of landlords raising Jeonse prices in advance during new contracts, the average Jeonse price for apartments in the Seoul metropolitan area has surpassed 400 million KRW. In Hanam, Gyeonggi Province, Jeonse prices surged by more than 55% within a year.

According to the monthly KB Housing Price Trend released by KB Kookmin Bank on the 2nd, the average Jeonse price for apartments in the Seoul metropolitan area last month was 400.1 million KRW, exceeding 400 million KRW for the first time since the statistics began in June 2011. Compared to 322.64 million KRW in January last year, this is a 24% increase. Considering that the average Jeonse price was 318.14 million KRW in January 2019, the increase over the past year accounts for most of the rise over the last two years.

The average Jeonse price for apartments in the Seoul metropolitan area surpassed 300 million KRW in November 2016, and it took 3 years and 10 months to exceed 350 million KRW in September last year. In contrast, it took only 4 months to rise from 350 million KRW to 400 million KRW.

Experts attribute the intensified Jeonse shortage to the sharp decrease in Jeonse listings following the implementation of the new lease law at the end of July last year. The demand to stay an additional two years in existing homes by exercising the right to request contract renewal has drastically reduced the Jeonse supply available on the market. Additionally, with the introduction of the rent cap system limiting deposit increases to a maximum of 5% upon renewal, landlords are raising Jeonse prices during new contracts to compensate, which is also cited as a reason for the rapid rise in Jeonse prices.

The average Jeonse price for apartments in Gyeonggi Province exceeded 300 million KRW for the first time in November last year, rising from 256.56 million KRW in January to 310.66 million KRW in November, and further to 326.44 million KRW last month, marking a 27.2% (69.88 million KRW) increase over one year. The area with the highest Jeonse price increase in Gyeonggi over the year was Hanam, with a rise of 55.8%. In fact, many complexes in Hanam saw Jeonse prices increase by more than 200 million KRW within a year. For example, an 84㎡ (exclusive area) unit in Misagangbyeon Palmier, Mangwol-dong, was leased for 690 million KRW on the 29th of last month, up 240 million KRW from 450 million KRW in January last year. Following Hanam, the areas with high Jeonse price increases were Giheung-gu, Yongin (46.2%), Gwangmyeong (42.2%), and Suji-gu, Yongin (41.6%). Based on 85.75㎡, Gwacheon recorded the highest price in the Gyeonggi area at 693.95 million KRW, followed by Bundang-gu, Seongnam (678.31 million KRW), and Gwangmyeong City (523.18 million KRW).

The average Jeonse price for apartments in Seoul was 588.27 million KRW, approaching 600 million KRW. The 11 districts south of the Han River saw a 23.4% (130.55 million KRW) increase over the year, while the 14 districts north of the Han River rose by 22.6% (87.3 million KRW) during the same period. The district with the highest Jeonse price increase was Seongbuk-gu at 31.4%. Based on 86.62㎡, Gangnam-gu had the highest Jeonse price, exceeding 1 billion KRW at 1.00402 billion KRW. It was followed by Seocho-gu (895.27 million KRW) and Songpa-gu (715.56 million KRW), with the three Gangnam districts ranking first to third.

Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Since the implementation of the new lease law, the rate of Jeonse contract renewals exceeded 70% as of December last year, intensifying the shortage of listings." He added, "While existing tenants benefit, the overall Jeonse market is experiencing severe arteriosclerosis."

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