Seoul Multi-Family and Multi-Unit Housing Market Faces 'Jeonse Concentration'

Dabang "Seoul Jeonse and Banjeonse Share Reaches 70.7% in June"
Jeonse Contracts 63.3%, Banjeonse 7.4%... Monthly Rent Share Decreases
Increased Property Tax Burden in Gangnam 3 Districts Leads to Many Jeonse to Banjeonse Conversions

[Asia Economy Reporter Onyu Lim] A ‘Jeonse concentration phenomenon’ has been observed in the monthly rent and Jeonse market for detached (multi-family), multi-unit, and row houses in Seoul.

According to data analyzed by the real estate information platform Dabang on the actual transaction prices of monthly rent and Jeonse for detached (multi-family), row, and multi-unit houses in Seoul from the Ministry of Land, Infrastructure and Transport this year, the volume of monthly rent and Jeonse transactions last month (as of July 7) was 12,981 cases. Among these, monthly rent accounted for 29.2% (3,796 cases), and Jeonse or half-Jeonse accounted for 70.7% (9,185 cases), meaning 7 out of 10 contracts were Jeonse or half-Jeonse.

The proportion of Jeonse and half-Jeonse contracts, which was around 61.6% in January, has steadily increased. It was 63.3% in February, 67.1% in April, and exceeded 70% last month. Looking at Jeonse contracts alone, they increased from 54.9% to 63.3%. Conversely, monthly rent decreased from 38.4% in January to 29.2% last month.

In the case of half-Jeonse, where the deposit exceeds 240 months’ worth of monthly rent, 962 cases (7.4%) were recorded last month. The proportion of half-Jeonse contracts, which was 6.7% of all contracts in January this year, steadily increased until May, reaching 7.5% in May, showing that the ratio of half-Jeonse transactions has risen for five consecutive months.

In particular, in the Gangnam 3 districts (Gangnam, Seocho, Songpa) and Gwanak district, where rental demand is high, the proportion of half-Jeonse transactions was around 10-11%, higher than the Seoul average. A representative from the Dabang Data Center said, “Some landlords, burdened by increased property taxes, are converting Jeonse properties into half-Jeonse forms in areas with high Jeonse demand,” adding, “There is potential for further increases in monthly rent and Jeonse prices for these houses.”