Worst Jeonse Crisis Relief? Seoul Jeonse Listings Increase

Over 50% Increase in a Month
Recovered to 20,000 Cases in 5 Months
Tug-of-War Between Landlords and Tenants
Jeonse Prices Continue to Rise
Spring Moving Season May Become Unstable

[Asia Economy Reporter Lim On-yu] The number of jeonse (long-term lease) listings for apartments in Seoul, which had sharply declined immediately after the implementation of the new Housing Lease Protection Act including the right to request contract renewal and the cap on rent increases, is now increasing. Although the market's supply and demand have somewhat eased due to reduced moving demand in the new semester, prices are still on the rise, making it premature to consider the market stable. There are concerns that the market could become unstable again during the spring moving season amid a tug-of-war between landlords and tenants.

According to Apartment Real Transaction Data (Asil), a real estate big data company, as of the 25th, the total number of jeonse listings for apartments in Seoul stands at 20,265. This is a 53.9% increase compared to 13,165 listings a month ago. The number of jeonse listings in Seoul has reached the 20,000 range for the first time in over five months since August 21 of last year. The jeonse listings in Seoul, which were in the 30,000 range in July, sharply declined after the new lease law was enacted, dropping to 10,000 in September and to the 9,000 range in October.

The market attributes the increase in listings to seasonal factors. It is explained that the number of listings has increased due to reduced moving demand in the new semester. A representative from a real estate agency in Mapo-gu, A Public Realtor Office, said, "It is currently the off-season for jeonse, and listings are accumulating mainly in areas with less favorable school districts," adding, "Also, because jeonse prices are too high, some tenants are giving up on moving and renewing their existing contracts."

Market changes are also reflected in the jeonse supply-demand index. According to KB Real Estate, the jeonse supply-demand index in Seoul for the third week of January was 168.1, marking a decrease for six consecutive weeks. The jeonse supply-demand index ranges from 0 to 200, with values above 100 and closer to 200 indicating a shortage of supply relative to demand.

However, despite the increase in listings, jeonse prices continue to rise. According to KB Real Estate, the jeonse prices for apartments in Seoul in the third week of February rose by 0.32% compared to the previous week, marking the 77th consecutive week of price increases. The rate of increase was even higher than the previous week's 0.30%, and record-high prices continue to be reported. For example, a 59㎡ unit (exclusive area) at Seocho Prugio Summit in Seocho-dong, Seocho-gu, was leased for 1.15 billion KRW on the 16th of this month, and a 114㎡ unit at Daechi I-Park in Daechi-dong, Gangnam-gu, was traded for 2.47 billion KRW on the 2nd. Both are record prices. Additionally, a 148㎡ unit in Olympic Athletes' Village Complex 2 in Bangi-dong, Songpa-gu, was leased on the 20th of this month for 1.23 billion KRW, 100 million KRW higher than the previous price, marking a record lease price.

The market sees a tug-of-war between landlords and tenants beginning. A representative from B Public Realtor Office in Songpa-gu said, "Compared to the fall when listings were scarce, jeonse listings have accumulated considerably," but added, "Because the new lease law makes it harder to raise jeonse prices going forward, landlords are reluctant to lower their asking prices." Experts warn that the jeonse shortage may reoccur during the spring moving season. This is due to the sharp decrease in jeonse supply available for circulation caused by the right to request contract renewal, as well as a reduction in new construction move-in listings. Ye Kyung-hee, senior researcher at Real Estate 114, said, "With spring moving demand and subscription waiting demand remaining in the jeonse market, price increases are expected to continue."