Only 1.9% of Large Apartment Complexes in Seoul Available for Jeonse... "I Paid 20 Million Won More to Secure a Contract"

Looking at large apartment complexes in Seoul with over 1,000 households moving in October and November this year, 2 to 4 years old
Out of 9,618 total households, only 192 are jeonse units... less than 2 per 100
Cases of tenants competing and raising deposits to secure contracts emerging
Jeonse shortage expected to worsen as autumn moving season intensifies amid COVID-19 spread

"It has become an era where even jeonse contracts are won through bidding."

This is the sentiment of Mr. A, a man in his 40s, who recently signed a jeonse contract for a newly built apartment in Geumho-dong, Seongdong-gu, Seoul. Due to the scarcity of jeonse listings, Mr. A secured the contract after competing with Mr. B, agreeing to pay 200 million KRW more than the initially proposed 900 million KRW by the landlord. Mr. A bitterly remarked, "I found a jeonse house, but I don't know whether to laugh or cry."

As the autumn moving season approaches, the jeonse shortage is reaching its worst state. The already insufficient jeonse supply has been completely depleted following the enforcement of the revised Housing Lease Protection Act, which includes the Jeonse and Monthly Rent Cap System and the Right to Request Contract Renewal. The resurgence of the novel coronavirus (COVID-19) has further intensified the difficulties faced by tenants trying to find new jeonse homes.

Reviewing Jeonse Listings in Large Apartment Complexes in Their 2nd and 4th Years of Occupancy... Less Than 2 Units per 100 Households

On the 19th, Asia Economy analyzed data from real estate information company Asil and found that jeonse listings in six large apartment complexes with over 1,000 households in Seoul, reaching their 2nd and 4th years of occupancy in October and November, accounted for only 1.9% of the total. The total number of households was 9,618, but there were only 192 listings.

For example, Lotte Castle Gold Park Phase 1 in Doksan-dong, Geumcheon-gu, which was occupied in November 2016 and has 1,743 households, had only 2 jeonse listings. E-Pyeonhansesang Oksu Park Hills in Oksu-dong, Seongdong-gu, had only 18 jeonse listings out of 1,976 units on the market. Centras Phases 1 and 2 in Hawangsimni-dong, Seongdong-gu, consisting of 2,529 households, had 100 listings, which was relatively better.

Lotte Castle Gold Park Phase 3 in Doksan-dong, Geumcheon-gu, occupied in October 2018, had 11 jeonse listings out of 1,236 households, and DMC Central I-Park in Namgajwa-dong, Seodaemun-gu, had 34 listings out of 1,061 units. Acro River Heim in Heukseok-dong, Dongjak-gu, occupied in November of the same year, had 27 jeonse listings out of 1,073 households.

Jeonse Shortage Deepens Due to Revised Lease Protection Act... "Newly Built and Schools-Adjacent Apartments Are Like Catching Stars in the Sky"

Since the typical jeonse contract period is two years, the 2nd and 4th years of occupancy usually see abundant jeonse and monthly rent listings. However, the severe shortage in these large complexes is due to the fact that, after the implementation of the right to request contract renewal, almost no units are available on the market. A representative from a real estate agency in Doksan-dong, Geumcheon-gu, said, "August is usually a busy season for jeonse transactions ahead of the autumn moving season, but currently, there is a lack of supply throughout Geumcheon-gu. Especially, newly built complexes near elementary and middle schools are extremely difficult to find jeonse listings for."

Additionally, market and policy factors such as landlords switching to semi-jeonse or monthly rent, mandatory residence requirements for reconstruction, and stricter residence conditions for long-term capital gains tax deductions for single homeowners are collectively fueling the jeonse shortage, according to frontline real estate agencies. A representative from a real estate agency in Oksu-dong said, "We are checking jeonse listings with contracts about to expire, but nine out of ten existing tenants want to renew their contracts. It seems unlikely that the number of listings will increase significantly."

With the recent resurgence of COVID-19, concerns are rising that the jeonse crisis could worsen seriously during the autumn moving season. Yoon Ji-hae, senior researcher at Real Estate 114, analyzed, "With the new Lease Protection Act making jeonse listings scarce and the spread of COVID-19 making it difficult to show houses, the jeonse market will revolve around contract renewals. Because of this, prices for new jeonse contracts have room to rise further."