"Already 2 Years of Actual Residence Withdrawal Effect?"... Eunma Jeonse Listings Increase by 99%

Clear Increase in Jeonse Listings at Major Reconstruction Complexes
Eunma 74 → 147, Seongsan Siyeong 20 → 36
"Acquiring Move-in Rights Without Actual Residence... Owners Rush to Convert to Rentals"

A view of Eunma Apartment, Daechi-dong, Gangnam-gu, Seoul

[Asia Economy Reporter Lim On-yu] Following the repeal of the '2-year actual residence' regulation for owners of reconstruction promotion complexes, there has been a sharp increase in jeonse (long-term lease) and monthly rental listings in major complexes such as Eunma in Daechi-dong, Gangnam-gu, Seoul, and Seongsan Sigyeong in Mapo-gu. This appears to be because homeowners, who no longer need to live in old and worn-out apartments to obtain the right to move into new apartments, hurriedly withdrew their actual residence plans and put their properties up for lease.

According to Apartment Real Transaction Data, a real estate big data company, as of the 19th, the total number of jeonse listings at Eunma Apartments, a representative reconstruction complex in Gangnam, reached 147, marking a 99% increase compared to 74 listings on the 12th. The number of jeonse listings doubled within a week. Monthly rental listings also increased by 34%, from 80 to 107 during the same period.

The rapid surge in jeonse and monthly rental listings at Eunma Apartments is attributed to the repeal of the 2-year actual residence regulation for reconstruction. Despite being 43 years old since construction, this complex is still at the stage of the reconstruction promotion committee. Accordingly, under the June 17th measures last year, homeowners who wanted the right to move into new apartments were likely required to fulfill the 2-year actual residence condition. However, on the 12th, the Land, Infrastructure and Transport Committee decided to exclude this regulation from the amendment to the 'Urban and Residential Environment Improvement Act,' causing a sudden change in the situation. Homeowners who can now obtain the right to move in without an actual residence history have put a large number of jeonse and monthly rental listings on the market.

A representative from real estate agency A in the area said, "We have been flooded with calls from homeowners who initially chose to live in their homes asking if they can switch back to jeonse or monthly rental," adding, "Those who spent tens of millions of won on home repairs are very dissatisfied." He continued, "As listings surged rapidly, some homeowners even lowered their asking prices by as much as 100 million won compared to the initial price."

Seongsan Sigyeong, a representative reconstruction complex in the northern part of Seoul, has also recently seen a sharp increase in jeonse and monthly rental listings. Although this complex passed the reconstruction safety inspection, it was still before the establishment of the association, so the 2-year actual residence regulation was likely to apply. However, after the repeal of the regulation, jeonse listings increased by 80%, from 20 to 36, and monthly rental listings rose by 125%, from 12 to 27. Jeonse listings at Hyundai 1st Complex in Gaepo-dong, Gangnam-gu, which is pursuing integrated reconstruction with Gyeongnam and Woosung 3rd complexes, also increased by 26%, from 23 to 29. Additionally, a clear increase in jeonse listings has been observed in some complexes in Sanggye Jugong in Nowon-gu, Changdong Jugong in Dobong-gu, and parts of the new town in Mok-dong, Yangcheon-gu.

Experts expect that amid the worsening jeonse shortage in Seoul in the second half of the year, the increase in listings due to this regulation repeal will provide some relief to the jeonse market. However, with ongoing negative factors such as large-scale reconstruction relocations and a decrease in new move-in volumes, it remains uncertain whether this will lead to a drop in jeonse prices. Ham Young-jin, head of the Zigbang Big Data Lab, stated, "The repeal of the actual residence obligation meaningfully reduces factors disrupting the jeonse market," but added, "The conversion of jeonse to monthly rent and the decrease in move-in volumes are causing the jeonse shortage, so it will be difficult for jeonse prices to fall."