Seoul Apartment Jeonse Prices Fall for 2 Consecutive Months... "Could Be a Temporary Phenomenon"

Seoul Apartment Average Jeonse Price 482.82 Million KRW in June → 419.36 Million KRW in August
Transaction Volume Also Plummets... 40% Decrease in August
Zigbang "Seoul's Low Supply of New Apartments May Cause Jeonse Price to Rise Again"

[Asia Economy Reporter Onyu Lim] The jeonse prices of Seoul apartments, which had soared to the high 400 million KRW range, have fallen for two consecutive months. However, the volume of jeonse transactions has also significantly decreased. While the demand waiting for subscription is increasing, the supply of new apartments in Seoul is limited, leading to forecasts that the decline in jeonse prices may be only a temporary phenomenon.

On the 21st, Zigbang analyzed data from the Ministry of Land, Infrastructure and Transport and found that the average actual transaction price for jeonse in Seoul in August was 419.36 million KRW. The actual transaction price for jeonse in Seoul has been declining since reaching an all-time high of 482.82 million KRW in June. The average in July was 457.42 million KRW.

Ham Young-jin, head of Zigbang Big Data Lab, explained, "In September, the average rose slightly to 433.01 million KRW, but since about ten days remain in September, it is necessary to observe further to determine whether this marks a recovery."

By autonomous district, since April, jeonse prices were highest in Seocho-gu, Gangnam-gu, and Songpa-gu, in that order. Seocho-gu's average actual jeonse transaction price rose to 840.06 million KRW in July but fell by 16.8% to 699.03 million KRW in August. Gangnam-gu and Songpa-gu showed similar trends, though less pronounced.

Looking at complexes with many jeonse transactions in June and July, Seocho-gu had about 20 high-priced transactions over 700 million KRW, but in August, transactions for apartments in the 300 million KRW range increased. In Gangnam-gu, high-priced apartment transactions such as Eunma and Dogok Rexle were frequent in June and July but decreased in August.

A Zigbang official explained, "Prices fell as transactions for high-priced apartments with good living environments decreased," adding, "This partly reflects the effect of strengthened residence obligation requirements, leading some landlords to move in themselves."

Along with the decline in jeonse prices, the volume of jeonse transactions in Seoul also decreased. There were 11,184 transactions in June, 10,144 in July, and 6,271 in August, with the decline continuing to widen. Notably, August saw a 40.16% decrease (4,209 transactions) compared to the previous year. Considering that contracts are typically for two years, this is a 39.6% decrease compared to 2018. A Zigbang official said, "Since the data is based on contract dates, we need to monitor the reported numbers further, but this partly reflects the effect of the application of the housing lease contract renewal right."

However, since monthly rent transactions also decreased during the same period, the conversion from jeonse to monthly rent is not considered the cause of the decline in jeonse transaction volume.

Zigbang also forecasted that the decline in Seoul apartment jeonse prices in July and August might be a temporary phenomenon. A Zigbang official said, "The remaining supply of new apartments in Seoul this year is about 10,000 units, and about 25,000 units next year, which is relatively insufficient compared to previous years," adding, "Due to the revision of the lease law, the number of jeonse contract renewals is increasing, which is expected to reduce the volume of jeonse listings. At the same time, demand from those remaining as non-homeowners to apply for apartment subscriptions is expected to continue for the time being, so the supply-demand imbalance may worsen, potentially causing an upward trend in actual transaction prices."