Significant Increase in Jeonse Listings in Major Reconstruction Complexes
Landlords Rush to List Jeonse as '2-Year Residency' Regulation is Lifted
Listings Surge, Asking Prices Drop by Up to 100 Million Won
74 cases → 196 cases in Eunma, Daechi-dong, Gangnam-gu, Seoul; 20 cases → 45 cases in Seongsan Siyoung, Mapo-gu...
After the repeal of the ‘2-year actual residence’ regulation for owners in reconstruction promotion complexes, the number of jeonse (long-term lease) listings in major complexes has sharply increased. As the number of listings grew, asking prices also dropped by about 100 million KRW. This appears to be because homeowners, no longer needing to live in old and worn apartments to secure pre-sale rights, hurriedly withdrew their actual residence plans and put their properties up for jeonse or monthly rent.
According to Apartment Real Transaction, a real estate big data company, the total number of jeonse listings in Eunma Apartments, a representative reconstruction complex in Gangnam, reached 196, an increase of 122 from 74 on the 12th. Jeonse listings increased by 165% within a week. Monthly rent listings also rose from 80 to 135 during the same period, an increase of 55 (69%).
The repeal of the 2-year actual residence regulation for reconstruction is cited as the reason for the rapid increase in jeonse and monthly rent listings at Eunma Apartments. Despite being 43 years old, this complex is still at the stage of a reconstruction promotion committee. According to the June 17th measures last year, homeowners who wanted pre-sale rights for new apartments were likely required to fulfill the 2-year actual residence condition. However, on the 12th, the Land, Infrastructure and Transport Committee decided to exclude this regulation from the amendment to the ‘Urban and Residential Environment Improvement Act,’ causing the situation to change rapidly. Homeowners who can now obtain pre-sale rights without actual residence history have put a large number of jeonse and monthly rent listings on the market.
A representative from real estate agency A in the area said, "We received a flood of calls asking whether homeowners who chose actual residence can switch back to jeonse or monthly rent." He added, "Those who spent tens of millions of KRW on home repairs are very dissatisfied." He also mentioned, "As listings surged, some homeowners lowered their asking prices by as much as 100 million KRW from the initial price."
Seongsan Siyoung, a representative reconstruction complex in the northern part of Seoul, also recently saw a sharp increase in jeonse and monthly rent listings. This complex passed the reconstruction safety inspection but is still before the establishment of the association, so the 2-year actual residence regulation was likely applied. However, after the regulation repeal, jeonse listings increased from 20 to 45 (125%), and monthly rent listings rose from 12 to 39 (225%). Jeonse listings in Hyundai 1st Complex, which is pursuing integrated reconstruction with Gyeongnam and Woosung 3rd Complexes in Gaepo-dong, Gangnam-gu, also increased from 21 to 36. Additionally, a clear increase in jeonse listings has been observed in some complexes in Sanggye Jugong, Nowon-gu; Changdong Jugong, Dobong-gu; and parts of the new town in Mokdong, Yangcheon-gu.
Experts expect that amid the worsening jeonse shortage in Seoul in the second half of the year, the increase in listings due to this regulation repeal will provide some relief to the jeonse market. However, with ongoing negative factors such as large-scale reconstruction relocations and a decrease in new move-in volumes, it is uncertain whether this will lead to a drop in jeonse prices. Ham Young-jin, head of the Zigbang Big Data Lab, said, "The repeal of the actual residence obligation meaningfully reduces factors that disrupt the jeonse market," but added, "The shift from jeonse to monthly rent and the decrease in move-in volumes are causing the jeonse shortage, so it will be difficult for jeonse prices to fall."
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