Seoul Jeonse Under 400 Million Won Share... 90% in 2011 → 50% This Year

Qualitative Decline Accompanied by Lease, Area Reduction, Aging, etc.
Zigbang "Need for Housing Quality Improvement Measures Considering Tenant Demand Characteristics"

[Asia Economy Reporter Onyu Lim] Mid-to-low priced jeonse (long-term lease) apartments are disappearing from the Seoul apartment market. The proportion of jeonse priced below 400 million KRW, which was close to 90% in 2011, sharply dropped to the 50% range in the first half of this year. Especially in the Gangnam 3 districts, the share is below 10%. As jeonse prices rise, the area available for the same amount of money shrinks, and with aging buildings worsening, the living conditions in Seoul are becoming more difficult, according to analysis.

According to Zigbang on the 10th, the transaction share by jeonse price range for Seoul apartments in the first half of this year was recorded as follows: 13.7% for 200 million KRW or less, 39.0% for over 200 million KRW up to 400 million KRW, 29.1% for over 400 million KRW up to 600 million KRW, 13.2% for over 600 million KRW up to 900 million KRW, and 5.1% for over 900 million KRW.

The decreasing trend in mid-to-low priced jeonse transactions is noticeable. The share of jeonse transactions priced below 400 million KRW was 89.7% in 2011, decreasing to 64.1% in 2016 and 52.7% in the first half of this year. Low-priced jeonse transactions under 200 million KRW sharply declined from 43.3% in 2011 to 13.7% in the first half of this year.

As jeonse prices rise, the area that can be obtained for the same amount of money is also shrinking. The average area for jeonse priced over 600 million KRW up to 900 million KRW decreased from 133.5㎡ in 2011 to 94.3㎡ in the first half of this year. The average area for jeonse priced under 200 million KRW shrank from 62.7㎡ to 43.5㎡.

More money is needed, but living conditions have worsened. The average building age for all jeonse price ranges in Seoul apartments is increasing. Especially for jeonse priced over 900 million KRW, the average building age was 5.2 years in 2011 but rose to 15.1 years in the first half of this year, increasing by nearly 10 years.

Relatively affordable apartments are concentrated in Nowon, Dobong, and Gangbuk districts (Nodogang), where the share of jeonse apartment transactions priced below 400 million KRW accounted for 88% in the first half of this year. In Geumcheon, Gwanak, and Guro districts (Geumgwan-gu), 76% of transactions were in this price range. The average exclusive area for jeonse apartments priced below 400 million KRW was largest in Geumgwan-gu at 64.1㎡, while Nodogang recorded 59.8㎡.

A Zigbang official said, “Although the government announced plans to ensure tenants’ lease periods and reduce rental burdens through the 8.4 supply plan and the Rental Protection Act, leading to housing stability, there is a need to consider distribution networks to ensure smooth circulation of rental supply so that tenants can actually reside.”