Polarization of Monthly Rent for Seoul Apartments: "Top 10% Pay 2.38 Million Won per Month"

Top 10% Monthly Rent Average 2.38 Million KRW, Remaining 90% Average 610,000 KRW
"Top 10% is 3.9 Times Higher than Bottom 90%... Largest Gap Since 2011"

[Asia Economy Reporter Onyu Lim] Polarization between the high-end and mid-to-low-end markets is intensifying in the Seoul apartment monthly rent market. In particular, since the implementation of the two lease laws, the right to request contract renewal and the rent ceiling system, the price gap between the top 10% and the bottom 90% has been widening.

According to Zigbang on the 16th, the average price of the top 10% of apartment monthly rents traded in the Seoul area this year was 2.38 million KRW. This is 3.89 times higher than the average of the remaining 90%, which was 610,000 KRW. This gap is the largest since monthly rent transaction prices were disclosed in 2011.

The average price of the top 10% in Seoul's monthly rent market rose significantly from 2.32 million KRW in 2018 and 2.3 million KRW in 2019 to 2.38 million KRW this year. On the other hand, the bottom 90% decreased from 650,000 KRW in 2018 and 652,000 KRW in 2019 to 612,000 KRW this year.

The polarization in the monthly rent market intensified especially after the implementation of the two lease laws at the end of July. The average price of the top 10% rose sharply from 2.153 million KRW before the implementation to 2.403 million KRW after, while the bottom 90% decreased from 622,000 KRW before to 583,000 KRW after. As the monthly rent prices of the top 10% and bottom 90% showed opposite trends, the gap widened from 3.46 times before the implementation to 4.12 times after.

Unlike the high-end apartment sales market, which has expanded beyond the Gangnam 3 districts to the entire Seoul area, the high-end apartment monthly rent market showed a trend of returning to the Gangnam 3 districts. The share of the Gangnam 3 districts in the top 10% of Seoul monthly rent transactions decreased from 75.7% in 2011 to 57.3% in 2016. However, the share increased from 2017 and reached 65.8% last year. This year, the share slightly decreased to 63.2%.

Ham Young-jin, head of Zigbang Big Data Lab, said, "Although there were concerns about instability in the lease market after the implementation of the lease laws, the top 10% in the monthly rent market experienced an increase in rent, while the bottom 90% showed little price movement and slightly decreased. Since the high-end lease market has a limited demand capable of paying monthly rent, it is expected to move separately from the general lease market."