[Again, Jeonse] "Year-end Reverse Jeonse Peak" Expert Forecasts Also Wrong... Rebound in Many Areas of Seoul's Largest Complex

Complete Survey of Largest Apartment Complexes by 25 Districts
Jeonse Prices Increased in 11 out of 21 Districts from May to November
"Concerns Over Non-Refund of Deposits Mostly Resolved Due to Jeonse Preference"

Among the 25 largest apartment complexes by district in Seoul, it was confirmed that the jeonse prices in 21 complexes (84%) increased compared to six months ago. The Seoul apartment rental market appears to have returned to a normal trajectory, defying experts' predictions of a 'year-end reverse jeonse peak.' Although prices have not reached the peak levels seen two years ago, the increase in the jeonse ratio and the upward price trend suggest that fears of deposit non-return have been significantly alleviated.

[Image source=Yonhap News]

Jeonse Prices Bottom Out and Rise in 21 of 25 Largest Complexes... Overturning Year-End Reverse Jeonse Peak Predictions

On the 8th, Asia Economy surveyed the jeonse prices of the 25 largest apartment complexes by household count in each Seoul district. The results showed that in November, prices rose in 21 areas compared to May, six months earlier. These areas included Gangnam, Gangbuk, Gangseo, Gwanak, Gwangjin, Guro, Nowon, Dobong, Dongdaemun, Mapo, Seodaemun, Seocho, Seongdong, Seongbuk, Songpa, Yeongdeungpo, Yongsan, Eunpyeong, Jongno, Jungnang, and Jung-gu, excluding Gangdong, Geumcheon, Dongjak, and Yangcheon. The survey was based on the largest household count, national standard size exclusive 84㎡ (59㎡ for Nowon), and the highest monthly price as of May.

May marked the point when reverse jeonse began to intensify in Seoul's apartment rental market, with jeonse prices plummeting and tenants fearing non-return of deposits. In fact, Asia Economy's survey at that time showed that jeonse prices in 21 of the 25 largest complexes by district had fallen compared to two years ago. Experts also predicted that "since jeonse prices peaked at the end of 2021, a structural year-end reverse jeonse peak was inevitable this year," causing anxiety among tenants.

However, the market moved differently from these forecasts. Tenants who had shifted to monthly rent or half-jeonse returned to jeonse, raising the jeonse ratio in Seoul's rental market to 61%. Prices also rose, easing concerns over deposit non-return.

By region, DMC Parkview Jai in Namgajwa-dong, Mapo-gu, rose from 751 million KRW in May to 830 million KRW in November, an increase of 180 million KRW. Banpo Jai in Banpo-dong, Seocho-gu, increased from 1.45 billion KRW to 1.6275 billion KRW, up 177.5 million KRW. Additionally, Hangaram in Ichon-dong, Yongsan-gu, rose from 825 million KRW to 1 billion KRW, up 175 million KRW; Gyeonghuigung Jai 2 Complex in Hongpa-dong, Jongno-gu, increased from 1 billion KRW to 1.15 billion KRW, up 150 million KRW; and Haengdang Daerim in Haengdang-dong, Seongdong-gu, rose from 610 million KRW to 720 million KRW, up 110 million KRW.

Outside the largest complexes by district, the jeonse price increase in popular complexes in the Gangnam area was even greater. For example, Dogok Rexle 84㎡ in Dogok-dong, Gangnam-gu, was traded at 1.5 billion KRW on the 25th of last month, a 300 million KRW increase compared to 1.2 billion KRW in May.

Ham Young-jin, head of the Zigbang Big Data Lab, said, "Although the jeonse price ratio has been rising recently due to lower sale prices, the monthly jeonse transaction volume exceeds 10,000, and the increase in deposit insurance subscriptions has significantly reduced the risk of reverse jeonse."

As the new rental law, which caused confusion in the jeonse market, settles in, there are also forecasts that such reverse jeonse risks will not recur for the time being.

Yoon Ji-hae, research team leader at Real Estate R114, stated, "As the new rental law enters its fourth year, the painful price fluctuations are ending, and the system is stabilizing. Moreover, with the government temporarily easing the Debt Service Ratio (DSR) regulations on jeonse deposit return loans, the risk of reverse jeonse can be considered almost eliminated."