Jeonse Rent Surge Leads to 23 Trillion Increase in Jeonse Loans from January to November This Year
Banking Sector Total Surpasses 103 Trillion
[Asia Economy Reporter Park Sun-mi] As the shortage of jeonse (long-term lease) supply causes jeonse prices to soar rapidly, the amount of jeonse loans in the banking sector has also surpassed 103 trillion won this year.
According to the banking sector on the 3rd, the total balance of jeonse loans from the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as of the end of November was 103.3392 trillion won. This is an increase of 22.886 trillion won compared to the balance of 80.4532 trillion won at the end of December last year.
From January to November this year, jeonse loans increased by about 23 trillion won, and if the current trend continues, the annual increase in jeonse loans is likely to exceed 20 trillion won for the first time ever and approach 25 trillion won.
Although the banking sector’s total household loan management led to a slowdown with jeonse loans increasing by 1.6 trillion won in November, the loan balance had already shown a four-month consecutive increase of over 2 trillion won in July (2.2 trillion won), August (2.6 trillion won), September (2.8 trillion won), and October (2.5 trillion won).
The sharp increase in jeonse loans is due to the rapid rise in jeonse prices. Since the second half of the year, the government’s implementation of the new Lease Protection Act has further accelerated the rise in jeonse prices nationwide, including Seoul. Additionally, as the government made it difficult to obtain mortgage loans for purchasing high-priced homes to curb overheating in the real estate market, housing demand decreased while jeonse demand increased, leading to a rise in jeonse prices.
According to the monthly KB Housing Price Trend data from KB Kookmin Bank’s LivOn, the average jeonse price of apartments in Seoul last month was 560.69 million won, up 23.9 million won from 536.77 million won in October. The November increase in jeonse prices was the largest in the 9 years and 5 months since KB Kookmin Bank began publishing this statistic in June 2011.
At the Trimage apartment complex in Seongsu-dong, Seongdong-gu, Seoul, a recent jeonse contract for a unit with an exclusive area of 49.67㎡ was signed with a deposit of 1.3 billion won, reaching a jeonse price of 86.53 million won per 3.3㎡. The average jeonse price for apartments in Seoul rose by 86.32 million won from the beginning of this year to November, with the increase from August to November?after the new Lease Protection Act took effect?accounting for 71.2% (61.46 million won) of the total increase.
Since the jeonse supply issue, cited as a cause of the jeonse shortage, is expected to continue into next year, the rapid increase in jeonse loans in the banking sector is likely to persist for the time being. The banking sector also expects that the increase in jeonse loans will not significantly slow down in December. A representative from a commercial bank said, "The rapid rise in jeonse prices will continue for the time being, and the increase in jeonse loans will be maintained above a certain level."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
