"Seoul Jeonse More Expensive Than Gyeonggi Sales... Accelerating Population Outflow"

Zigbang "Seoul 'Jeonse' Median Price is 135 Million KRW Higher than Incheon 'Sale' Median Price"

[Asia Economy Reporter Onyu Lim] As the gap between Seoul’s jeonse prices and the sale prices in Incheon and Gyeonggi widens, population outflow from Seoul to Incheon and Gyeonggi continues. It is expected that this population outflow will accelerate as long as instability in Seoul’s jeonse market persists.

According to Zigbang on the 12th, the difference between the median price of apartment jeonse transactions in Seoul and the median price of apartment sales transactions in Gyeonggi and Incheon has significantly widened compared to nine years ago. This year, the median price of apartment jeonse transactions in Seoul is 400 million KRW, which is 80 million KRW and 135 million KRW higher than the median sale prices of apartments in Gyeonggi (320 million KRW) and Incheon (265 million KRW), respectively. The gap, which was around 10 million KRW and 35 million KRW in 2011, has increased by 70 million KRW and 100 million KRW, respectively.

The proportion of cases where the sale price is lower than the median jeonse price of Seoul apartments this year was 79.4% in Incheon and 65.8% in Gyeonggi. A Zigbang official explained, “In both regions, apartment sales transactions below the median jeonse price of Seoul apartments predominate. Although there is a decreasing trend in both areas, the proportion is still higher than before 2015.”

Zigbang views that the higher jeonse prices in Seoul compared to the sale prices in Incheon and Gyeonggi are causing population outflow from Seoul to these areas. This is explained as a chain reaction of population movement from Seoul to the metropolitan area and outskirts of Seoul to alleviate housing cost burdens and housing instability caused by jeonse.

Over the past five years (2016 to September 2020), the Incheon and Gyeonggi area with the highest number of sales transactions below the median jeonse price of Seoul apartments was Namyangju, with a total of 36,177 cases. Other areas with over 30,000 transactions include Hwaseong City (36,131 cases), Bucheon City (32,004 cases), and Bupyeong District (30,862 cases). On the other hand, areas adjacent to Seoul’s Gangnam district such as Seongnam, Gwacheon, and Anyang recorded less than half the proportion of transactions below the median jeonse price of Seoul apartments, showing price differences depending on proximity and accessibility to Gangnam.

Ham Young-jin, head of Zigbang Big Data Lab, said, “Since it takes time for government supply measures to translate into actual supply, it is expected that the population movement phenomenon caused by the price gap between Seoul and the metropolitan area will continue.”