Major Areas like Gangnam and Mayongsung
Listings Dry Up but Demand Keeps Pouring In
Waiting in Line to View Homes... Prices Skyrocket
'Tenant Interviews' Becoming a Reality
Concerns Over Empty Jeonse in Outskirts of the Capital Region
[Asia Economy Reporters Inho Yoo, Donghyun Choi, Chunhee Lee] Recently, a remarkable scene unfolded in an apartment complex in Daechi-dong, Gangnam-gu, Seoul, where a landlord interviewed six prospective tenants. This 'tenant interview,' which had been raised in online communities ahead of the implementation of the 'Lease 2 Act'?including the contract renewal request system and the rent ceiling system?at the end of July, has become a reality.
A representative from Daechi-dong A Real Estate Agency (licensed) said, "From the landlord's perspective, they essentially have to consider a '4-year lease,' so prices inevitably rise," adding, "Tenant selection through interviews is actually taking place."
The rental housing shortage is spreading relentlessly not only in major areas such as Gangnam and Ma-Yong-Seong (Mapo, Yongsan, Seongdong districts) but also in the outskirts of Seoul and throughout the metropolitan area. After the implementation of the Lease 2 Act, the number of contract renewals by existing tenants surged, causing rental listings to dry up. This is the exact opposite of the government's expectation at the time of the law's enforcement that "the market will stabilize in about two months." Although landlords are raising prices, the severe shortage of listings has eliminated tenants' choices, making rental prices a "whatever the landlord asks" situation. Frontline real estate agencies describe this as not just a rental crisis but a 'rental turmoil.'
Rental Listings Have Dried Up
According to frontline real estate agencies on the 14th, the rental market in Gangnam, Seoul, where moving demand is concentrated for the new school year next year, is in the worst condition. Listings are nonexistent, and waiting demand is surging, causing prices to skyrocket. The representative of Daechi-dong B Real Estate said, "Most of the rental listings left on the internet are cases where there are many loans or urgent sellers whom even desperate people hesitate to rent from, so practically, there are no real listings."
According to statistics from Asil (Apartment Real Transaction Price), a real estate big data company, there are only three rental listings in Raemian Daechi Palace in Daechi-dong, which has 1,608 households. Even monthly rentals are only six listings. This contrasts sharply with July 14, three months ago, when there were 195 rental and 227 monthly rental listings. Eonma Apartment, with 4,424 households, is also experiencing a surge in rental demand from parents for school assignments for the new semester, but there are no listings available.
The same situation applies to the new town area of Mok-dong in Yangcheon-gu, which has high school district demand. The representative of Mok-dong C Real Estate said, "Even if landlords ask for 100 million to 200 million KRW higher than the previous price, contracts are quickly concluded," adding, "As a broker, I even feel sorry for the tenants."
The situation in the city center is no different. Mapo Raemian Prugio in Ahyeon-dong, Mapo-gu, a large complex with 3,835 households, reportedly has only about five rental listings. The rental price for a 59㎡ (exclusive area) unit, which was around 600 million KRW in June, has now risen to as much as 750 million KRW even for lower floors.
Rental Crisis Spreads to Outskirts, Causing Anxiety
On the 13th, about 10 prospective tenants lined up to view a jeonse rental property at a Jugong apartment in Gayang-dong, Gangseo-gu, Seoul. (Source=Online community capture)
The rental housing shortage originating in Seoul is spreading to the outskirts and the metropolitan area. On the 13th, in the hallway of A Jugong Apartment in Gayang-dong, Gangseo-gu, Seoul, about ten hopefuls lined up to view a rental unit, and the tenant was decided by drawing lots. A 58㎡ unit in Jugong 6 Complex in Sanggye-dong, Nowon-gu, which was priced at 230 million KRW at the beginning of the year, was traded last month for 310 million KRW, marking a 35% price surge this year.
The rental crisis has spread to Seoul-adjacent areas such as Gwacheon, Bundang, Yongin, and Gwangmyeong. The 85㎡ unit in Dongmoon Good Morning Hill 5th Complex in Dongcheon-dong, Yongin-si, Gyeonggi-do, which was in the low 400 million KRW range at the beginning of the year, soared to 600 million KRW last month. Recently, a 85㎡ unit in Doosan We've Trigeum in Haan-dong, Gwangmyeong, was rented for 730 million KRW. This apartment's rental price was 516.6 million KRW as of July.
In the outskirts of the metropolitan area, rental prices have surpassed sale prices, raising concerns about 'empty rental deposits.' A 32m² unit in Punglim I-One 1st Complex in Wolgot-dong, Siheung-si, Gyeonggi-do, was recently rented for 87 million KRW, which is 2 million KRW higher than the actual sale price of 85 million KRW recorded in early last month. Similarly, the rental price of an 84㎡ unit in World Meridian, Haesol Village 2nd Complex in Paju Unjeong New Town, was 220 million KRW, exceeding the sale price of 215 million KRW.
The problem is that there is no effective solution to the rental crisis. Won-gap Park, Senior Real Estate Specialist at KB Kookmin Bank WM Star Advisory Group, said, "Short-term measures might include expanding rental deposit loans, but this could actually induce further rental price increases." Professor Daejung Kwon of the Graduate School of Real Estate at Myongji University also expressed concern, saying, "Due to factors like the 3rd New Town development, rental demand is increasing, but supply is limited," adding, "The rental supply-demand shortage may continue into next year."
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