Monthly Rent Transactions Reach Highest Since 2011 Statistics
Jeonse Prices Rise and Loan Restrictions Increase Monthly Rent Tenants
Increased Comprehensive Real Estate Tax Burden Accelerates Landlords' Shift to Monthly Rent
This year, the volume of monthly rent transactions in Seoul's rental market has increased to an all-time high. This is interpreted as a result of rapidly rising jeonse prices and strengthened government loan regulations, pushing more people toward monthly rent.
According to the Seoul Real Estate Information Plaza on the 21st, the number of apartment rental transactions involving monthly rent in Seoul this year up to the previous day totaled 56,169. This is the highest figure since related statistics began being compiled in 2011.
From January to November, the total monthly rent transactions were around 25,000 in 2011?2012, increased to about 30,000 in 2013?2014, and showed an upward trend to around 40,000 in 2015?2019.
Last year, the number surpassed 50,000 for the first time, setting a previous record. However, this year, it has already exceeded 50,000, accelerating the growth rate.
The proportion of monthly rent in rental transactions is also increasing. As of the previous day, the monthly rent transaction ratio from January to November this year was 36.4%, the highest ever. Considering that the previous highest ratio for January to November was 34.7% in 2016, the gap is significant.
Monthly rent is increasing particularly rapidly in areas where many low-income residents live. In Seoul, Geumcheon-gu, which has many mid-to-low-priced complexes, saw apartment monthly rent transactions surge to 2,018 this year. This figure is more than four times the monthly rent transactions (504) recorded by the end of November last year. Geumcheon is the only district among Seoul's 25 districts where the monthly rent ratio (59.1%) is higher than the jeonse ratio (40.9%) this year.
The industry expects the monthly rent ratio to increase further. This is because the new rental laws, such as the contract renewal request system and the rent ceiling system, which were implemented at the end of July last year, have strongly caused a decrease in jeonse and an increase in monthly rent.
Above all, with the recent policy to strengthen household debt management blocking even jeonse loan funds, more low-income residents have no choice but to move to monthly rent.
According to statistics from the Korea Real Estate Board, the average monthly rent price for apartments in Seoul recorded 1,234,000 won last month, a 10.2% increase compared to 1,120,000 won in October last year.
The sharp rise in holding taxes such as comprehensive real estate tax borne by landlords is also expected to accelerate the conversion of jeonse listings to monthly rent. The average monthly rent price for apartments in the Gangnam area, where the comprehensive real estate tax burden is relatively high, was 1,294,000 won as of last month, 122,000 won higher than the 1,172,000 won in the Gangbuk area.
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