Apartment Average Jeonse Price per 3.3㎡ Ranks 1st: Gangnam → Seocho
Large Complex Move-ins and Jeonse Avoidance Combine to Challenge Tenant Recruitment
In an era of high interest rates leading to a preference for monthly rent over jeonse (long-term deposit lease), landlords fear new apartment move-ins. Recently, Gangnam-gu in Seoul, where a large complex of over 3,300 households began moving in, lost its position as the district with the highest average apartment jeonse price per 3.3㎡ to Seocho-gu for two consecutive months. Landlords who once benefited from the surge in jeonse prices after the new lease law are now reluctantly lowering deposits to attract tenants.
On the 1st, Economy Man Lab analyzed KB Real Estate housing price trends and found that the average apartment jeonse price per 3.3㎡ in Seoul in March was 22,855,000 KRW, a 4.7% (1,127,000 KRW) decrease from the January average of 23,983,000 KRW.
Among Seoul's 25 autonomous districts, Gangnam-gu experienced the largest drop in average jeonse price per 3.3㎡. It fell from 37,007,000 KRW in January to 34,113,000 KRW in March, a 7.8% (2,894,000 KRW) decline. As a result, Gangnam-gu has ceded its top spot for average apartment jeonse price per 3.3㎡ to Seocho-gu for two consecutive months since January.
The sharp decline in Gangnam-gu's jeonse prices is due to a significant supply of new apartments amid a strengthened aversion to jeonse caused by high interest rates. Last month, Gaepo Xi Presidents, a complex with 3,375 households in Gaepo-dong, began move-ins. However, as tenants preferred monthly rent with lower interest burdens, jeonse demand decreased, prompting landlords who need to settle balances to lower jeonse prices to attract tenants. Consequently, the decline in jeonse prices spread like a domino effect to nearby semi-new and older apartments.
In fact, in Gaepo-dong, there was a transaction where the jeonse price dropped by 300 million KRW compared to a year ago. A 59.92㎡ unit in Gaepo Raemian Forest signed a jeonse contract on the 21st of last month with a deposit of 750 million KRW. The deposit for the same size was 1.08 billion KRW in March last year, marking a drop of over 300 million KRW in one year.
In June, the Daechi Prugio Summit with 489 households and in November, the 6,702-household D.A.T. Firstier I-Park are scheduled to open consecutively, so Gangnam-gu's jeonse prices are expected to continue declining for the time being. According to Real Estate R114, Gangnam-gu's move-in volume this year is 6,371 households, and 6,702 households next year, the highest among Seoul's 25 districts.
Hwang Hansol, a research analyst at Economy Man Lab, said, “Considering real estate prices are determined by supply and demand, Gangnam-gu, with a large volume of new apartment move-ins, is expected to continue experiencing a weak trend in jeonse prices.”
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