Due to COVID-19 Impact, One-Room Monthly Rent ↓ While Two-Room Monthly Rent ↑ Amid Jeonse Shortage

[Asia Economy Reporter Lim On-yu] As non-face-to-face lectures have increased due to the spread of the novel coronavirus infection (COVID-19), the monthly rent for one-room apartments in Seoul, including university areas, has declined. On the other hand, as apartment jeonse prices have risen, the monthly rent for two-room and three-room apartments, which can serve as alternatives, has increased.

According to Dabang, a real estate information platform, the average monthly rent for one-room units (exclusive area of 33㎡ or less) in multi-family and multi-unit houses in Seoul last month was 470,000 KRW, down 7.8% (40,000 KRW) compared to the same period last year. Dabang calculated the monthly rent by converting all security deposits into 10 million KRW equivalents.

By region, last month the one-room rent in Gangseo-gu was 380,000 KRW, down 9.5% (40,000 KRW) from 420,000 KRW in the same period last year, marking the largest decrease. Monthly rents also fell in Seongdong-gu (490,000 KRW → 450,000 KRW), Seodaemun-gu (500,000 KRW → 460,000 KRW), and Gwangjin-gu (450,000 KRW → 440,000 KRW).

Conversely, rents rose in Gangbuk-gu (350,000 KRW → 390,000 KRW), Geumcheon-gu (340,000 KRW → 370,000 KRW), Guro-gu (350,000 KRW → 380,000 KRW), and Mapo-gu (480,000 KRW → 510,000 KRW).

In particular, one-room rents around university areas dropped significantly: Hongik University fell from 530,000 KRW last year to 470,000 KRW this year, a decrease of 60,000 KRW; Korea University (440,000 KRW → 420,000 KRW), Hanyang University (480,000 KRW → 460,000 KRW), Sookmyung Women’s University (470,000 KRW → 460,000 KRW), and Seoul National University (380,000 KRW → 370,000 KRW) also saw decreases of 10,000 to 50,000 KRW.

However, Seoul National University of Education (510,000 KRW → 560,000 KRW) and Chung-Ang University (400,000 KRW → 420,000 KRW) experienced rent increases.

A representative from Dabang’s Data Analysis Center explained, "Due to the resurgence of COVID-19, the volume of jeonse and wolse transactions has decreased, and with the ongoing low-interest-rate environment, tenants continue to prefer jeonse, which seems to have caused one-room prices to decline."

Unlike the one-room market, the average price for two-room and three-room units (exclusive area of 60㎡ or less) in Seoul rose significantly from 640,000 KRW to 720,000 KRW during the same period, an increase of 12.5% (80,000 KRW).

Yangcheon-gu saw the largest increase, rising 100,000 KRW (17.9%) from 560,000 KRW to 660,000 KRW in one year. Other districts with over 10% increases included Gangseo-gu (590,000 KRW → 680,000 KRW), Dobong-gu (500,000 KRW → 560,000 KRW), Gangnam-gu (1,050,000 KRW → 1,170,000 KRW), Gwanak-gu (630,000 KRW → 700,000 KRW), and Seongdong-gu (660,000 KRW → 730,000 KRW).

Only six areas, including Jung-gu (1,100,000 KRW → 920,000 KRW) and Gangbuk-gu (600,000 KRW → 560,000 KRW), saw decreases in two-room and three-room rents; all others rose.

A Dabang representative said, "As both apartment sale prices and jeonse prices rise, interest in two-room and three-room markets in multi-unit and multi-family houses, which can substitute for small apartments, has increased, leading to price rises."