"Even Metropolitan Area Apartments... 1 in 3 at Risk of 'Kkangtong Jeonse'"

[Asia Economy Reporter Ryu Tae-min] Recently, as housing prices have plummeted, it has been revealed that one out of three apartments in the Seoul metropolitan area was sold at a price lower than the jeonse deposit. As concerns over "empty jeonse" (Kkangtong Jeonse) grow, experts point out that special caution is needed to protect jeonse deposits, such as subscribing to guarantee insurance.

On the 17th, real estate brokerage firm Jiptos analyzed apartment complexes in the Seoul metropolitan area through the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system. The analysis showed that among 9,863 apartments sold last year, 2,244 (23%) were sold at prices lower than the previous highest jeonse price. By quarter, in the fourth quarter of last year, 1,581 out of 4,096 apartments (39%) were sold below the highest jeonse price. This represents more than a fourfold increase compared to 9% in the first quarter.

This figure excludes canceled transactions and direct transaction prices among actual transactions of apartments with exclusive areas of 40㎡ or more. The previous highest jeonse price was based on the highest jeonse prices by apartment size contracted between 2020 and last year.

In the Seoul metropolitan area, Incheon had the highest proportion of apartments sold below the jeonse price last year, at 36%. Among 1,522 apartment complexes in Incheon, 549 were sold below the previous highest jeonse price. Notably, this ratio rose to 48% in the fourth quarter of last year, meaning nearly half were at risk of "empty jeonse." Gyeonggi Province followed with 30% for the year and 45% in the fourth quarter.

For example, an 84㎡ (exclusive area) apartment in Juan The World State, Michuhol-gu, Incheon, was leased at a jeonse price of 450 million KRW in December 2021, but its sale price dropped to 350 million KRW in December last year. In Giheung-gu, Yongin-si, Gyeonggi Province, an 84㎡ apartment in Hyosung Harrington Place was leased at a deposit of 545 million KRW in May last year, but was sold for 505 million KRW in December of the same year.

In Seoul, the proportion of apartments sold below the highest jeonse price was low at 2% last year. Even in the fourth quarter, when the "empty jeonse" rate was highest, it was relatively low at 6% compared to other regions.

Jin Tae-in, head of the apartment brokerage team at Jiptos, said, "Due to the rapid interest rate hikes over the past six months, many complexes are experiencing falling sale prices, and some are even being sold at prices lower than the existing jeonse price." He advised, "To protect jeonse deposits, it is essential to subscribe to guarantee insurance, and special caution is needed when dealing with apartments that have had no sales for more than six months during jeonse transactions."