Gwangmyeong and Hanam Jeonse Listings Decrease 30-40% in One Month
Popular Complexes' New Jeonse Prices Soar to Twice the Renewal Rate
Experts Say "Jeonse Shortage Inevitable for the Time Being"
[Asia Economy Reporter Onyu Lim] The jeonse (long-term lease) shortage in Gyeonggi Province is severe. As soaring jeonse prices in Seoul drive a mass exodus to major cities such as Hanam, Gwangmyeong, Seongnam, and Gimpo, the demand for moving ahead of the pre-sale subscription has surged, leaving almost no available listings. The jeonse market is in turmoil, with new prices reaching up to twice the renewal prices.
According to apartment transaction big data company Apartment Real Transaction Price on the 13th, the current number of jeonse listings in Hanam apartments is 950. This is a decrease of 408 listings (30.1%) compared to 1,358 listings a month ago. The number of jeonse listings in Hanam has fallen below 1,000 for the first time in six months since January. During the same period, jeonse listings in Gwangmyeong dropped from 660 to 382, a decrease of 278 listings, marking the highest reduction rate in Gyeonggi Province at 42.2%. Other areas showed similar trends: △Suwon Paldal-gu 312 → 237 (24.1% decrease) △Seongnam Jungwon-gu 213 → 164 (32.1% decrease) △Gimpo 1,130 → 955 (15.5% decrease).
Experts believe that the jeonse shortage in major cities of Gyeonggi Province has been greatly influenced by the exodus from Seoul. Due to the new Lease Protection Act and the recently canceled two-year owner-occupancy regulation for reconstruction, Seoul apartment jeonse prices have skyrocketed. Last month, the average jeonse price was 626.78 million KRW, a 28% increase from 491.48 million KRW a year ago. Consequently, as more people escape to the metropolitan area within commuting distance from Seoul, jeonse demand has increased. In fact, over the past six months this year, Seoul’s population decreased by 102,475, while Gyeonggi Province’s population increased by 73,654. Professor Choi Seul-gi of the Korea Development Institute (KDI) Graduate School of International Policy said, "Most of the population leaving Seoul is settling in the metropolitan area such as Gyeonggi Province or Incheon, where commuting to Seoul is possible," adding, "Housing issues are the biggest factor."
The imminent pre-sale subscription of public apartments in the metropolitan area is also a major cause of the jeonse shortage. The pre-sale subscription will officially begin on the 16th, starting with Incheon Gyeyang, Wirye, and Seongnam Bokjeong. Since applicants must reside in the area and fulfill a mandatory residence period of up to two years, jeonse demand is bound to continue. Although large-scale housing sites allow subscription even without residency, moving to the area is inevitable to increase the chances of winning the lottery.
Due to the new Lease Protection Act, jeonse supply in Gyeonggi Province is also limited, and as demand steadily flows in, jeonse prices in the area are rising rapidly. In Incheon, where pre-sale subscriptions are imminent, apartment jeonse prices rose by 0.41% last week, marking a 0.4% or higher increase for three consecutive weeks. The dual pricing phenomenon in popular areas is also becoming entrenched. For example, in Hanam Pungsan-dong, Misagangbyeon Central Xi 96.98㎡ (exclusive area), the asking price is 900 million KRW, whereas just two months ago in May, the renewal price was 420 million KRW. The new price is more than twice the renewal price. In Gwangmyeong Cheolsan-dong, Cheolsan Raemian Xi 84.44㎡ was contracted last month at 750 million KRW and 525 million KRW, respectively. The new price was 225 million KRW higher than the renewal price. The situation is similar in Seongnam Sujeong-gu, Changok-dong, Wirye Nature & Raemian e-Pyeonhansesang 84.95㎡, where contracts were made last month at 493.5 million KRW and 730 million KRW, a difference of 236.5 million KRW.
Experts expect that the jeonse shortage in Gyeonggi Province will be inevitable for the time being, as there are no plans to expand supply to lower Seoul jeonse prices and it will take years until the main subscription for the 3rd New Towns is completed. Especially next year will be the first year when households that renewed contracts under the new Lease Protection Act come onto the jeonse market, which may cause confusion. Kim Hak-ryeol, head of the Smart Tube Real Estate Research Institute, said, "Households that have used the contract renewal right once will find it even harder to find jeonse next year when their contracts end," adding, "People without money will inevitably be pushed to lower-tier areas."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
