KDI Announces '2021 Q4 Real Estate Market Trends'
[Asia Economy Sejong=Reporter Kwon Haeyoung] Due to the surge in jeonse prices following the 'Lease 3 Acts,' recent increases in loan interest rates, and the growing property tax burden on multi-homeowners, the prices of 'banjeonse, banwolse'?where part of the jeonse deposit is converted into monthly rent?are rapidly rising in the rental market. The asset gap has also widened significantly depending on whether the housing is owned in Seoul or other regions.
According to the '2021 Q4 Real Estate Market Trends' report released by the Korea Development Institute (KDI) on the 27th, the share of monthly rent from January to November last year was 43%, up from 41% during the same period the previous year. During the same period, the share of jeonse decreased from 59% to 57%.
The integrated monthly rent price (pure monthly rent, quasi-monthly rent, quasi-jeonse) rose by 0.8%, the same as the previous quarter. Looking at the types of deposits, the price of quasi-monthly rent, which has a relatively high deposit ratio, increased from 0.7% in Q3 to 0.8% in Q4 last year, and quasi-jeonse rose from 1% to 1.2%, expanding the rate of increase. KDI analyzed, "This suggests that due to the burden from the sharp rise in jeonse prices and the increase in loan interest rates, some jeonse demand is shifting to monthly rent." Recently, the interest rate on jeonse loan funds has approached 5% annually. Landlords also face increased property tax burdens due to rising publicly announced prices and punitive comprehensive real estate taxes imposed on multi-homeowners, which seems to have led to demand for converting to monthly rent to cover taxes.
In particular, the acceleration of monthly rent conversion in apartments was notable. The increase rate of integrated monthly rent prices by housing type showed a slight rise from 0.3% to 0.4% for row houses, while detached houses remained at 0.2% as in the previous quarter, but apartments maintained a higher increase rate of 1.2% compared to other types.
The jeonse market also remained unstable. For tenants who did not exercise the right to renew the jeonse contract under the Lease 3 Acts, the jeonse price increase rate was close to 20%. In November last year, when the renewal right was used in apartment jeonse transactions, the jeonse deposit rose by about 4% (from 490 million KRW to 510 million KRW), but in cases of re-contracting without using the renewal right, the deposit surged by 19% (from 470 million KRW to 560 million KRW).
In the case of monthly rent transactions, when the renewal right was not used, the deposit rose from 350 million KRW to 390 million KRW, and the monthly rent jumped from 700,000 KRW to 930,000 KRW. In contrast, when the renewal right was used, the deposit remained at 300 million KRW, and the monthly rent increased only from 870,000 KRW to 940,000 KRW.
The asset polarization between Seoul and other regions also progressed sharply. Based on median sale prices, Seoul apartments rose 85.4% from 520 million KRW in 2016 to 970 million KRW in 2021, while apartments in the five major metropolitan cities increased by 42% from 210 million KRW to 310 million KRW. As a result, the gap between Seoul and the five major metropolitan cities widened significantly from 310 million KRW to 660 million KRW.
Although the rise rate in the Gyeonggi region was 92%, higher than Seoul, since Seoul apartment prices were already very high and the rise rate was similar to that of Gyeonggi, the median sale price gap between Seoul and Gyeonggi apartments doubled from 240 million KRW to 420 million KRW.
Regarding the outlook for this year's real estate market, 51.3% of real estate and economic experts predicted a 'decline,' a higher proportion than the 30.4% who expected an 'increase.' Meanwhile, 18.3% of respondents anticipated a 'stable' market.
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