Increase in High Monthly Rent from 1 Million to 5 Million Won
Impact of Rising Jeonse-to-Wolse Conversion Rate Due to High Interest Rates
The average monthly rent paid by apartment tenants in Seoul this year has surpassed 1 million KRW. Among these, one-third of all monthly rent transactions are high-priced rents exceeding 1 million KRW. The burden of housing costs on tenants is increasing amid prolonged high interest rates.
On the 11th, Real Estate R114 analyzed apartment monthly rent contracts (excluding jeonse deposits) reported to the Ministry of Land, Infrastructure and Transport's actual transaction price system. The average monthly rent for apartments traded in Seoul from January to November this year was 1.02 million KRW.
This year, the average monthly rent paid by apartment tenants in Seoul has surpassed 1 million won, with one-third of all monthly rent transactions exceeding 1 million won. Amid prolonged high interest rates, tenants' housing cost burdens are increasing. [Photo by Yonhap News]
This is 120,000 KRW (13.3%) higher than the average of 900,000 KRW two years ago in 2021, and 40,000 KRW higher than last year's 980,000 KRW. The increase in monthly rent is largely due to the rise in jeonse prices this year and the accompanying increase in the jeonse-to-monthly rent conversion rate applied when converting jeonse to monthly rent amid the impact of high interest rates.
According to a survey by the Korea Real Estate Board, the jeonse-to-monthly rent conversion rate for Seoul apartments rose from an average of 4.1% in 2021 to 4.3% last year. This year, it jumped to an average of 4.7%.
The ongoing high interest rate trend since last year has driven up monthly rents. Due to increased anxiety over the return of deposits following jeonse fraud incidents, some high-deposit jeonse tenants converted part of their deposits into monthly rent.
In particular, the proportion of high-priced monthly rents exceeding 1 million KRW is increasing. The share of monthly rents at or below 1 million KRW in Seoul apartments decreased from 71.7% in 2021 to 68.3% last year, and further to 66% up to November this year.
Conversely, the share of monthly rents exceeding 1 million KRW increased from 28.3% in 2021 to 31.7% last year, and to 34% this year. One-third of monthly rent tenants contracted this year paid rent of 1 million KRW or more per month.
While the share of ultra-high monthly rents exceeding 5 million KRW has not changed significantly over the past three years, the share of rents between 1 million KRW and 5 million KRW increased from 27.6% in 2021 to 30.8% last year, and to 33% this year.
Yongsan-gu Has the Highest Average Monthly Rent at 2.08 Million KRW
Over the past three years, the proportion of ultra-high monthly rents exceeding 5 million won has not changed significantly, whereas the proportion of rents between 1 million won and 5 million won has increased from 27.6% in 2021 to 30.8% last year and 33% this year. [Photo by Yonhap News]
By district, Yongsan-gu had the highest average monthly rent at 2.08 million KRW. This is influenced by many high-priced monthly rent contracts in places like Nine One Hannam and Hannam The Hill.
According to the Ministry of Land's actual transaction price system, a 273㎡ exclusive area unit in Nine One Hannam was contracted in July this year with a deposit of 2 billion KRW and a monthly rent of 41 million KRW, while a 235㎡ exclusive area unit in Hannam The Hill was contracted in August this year with a deposit of 500 million KRW and a monthly rent of 24 million KRW.
As the burden of monthly rent increases, demand to convert monthly rent to jeonse is rising, leading to an increase in the proportion of jeonse and a decrease in monthly rent proportion.
The proportion of monthly rent in Seoul apartments, which surged to 52.4% in December last year, decreased to 44.8% in January this year and further dropped to the lowest level of the year at 36.3% in November. This is the lowest monthly level in two years and six months since May 2021 (32.8%).
On an annual average basis, the share of monthly rent was 39.6% in 2021, increased to 43.9% last year, and decreased to 40.9% up to November this year.
Seoul Apartment Jeonse Prices Surpass 23 Million KRW per Pyeong After 9 Months
Along with the rise in monthly rent, the jeonse price of apartments in Seoul has surpassed 23 million KRW per pyeong (approximately 3.3㎡) for the first time in nine months. The jeonse prices of apartments have been on the rise again since August. [Photo by Yonhap News]
Along with the rise in monthly rent, Seoul apartment jeonse prices have surpassed 23 million KRW per pyeong (approximately 3.3㎡) for the first time in nine months. Apartment jeonse prices have been on the rise again since August.
According to KB Real Estate's housing price statistics on the 10th, the average jeonse price per pyeong for Seoul apartments in November this year was 23.085 million KRW. This is a 0.88% increase from the average price of 22.883 million KRW in October. Seoul apartment jeonse prices have crossed the 23 million KRW mark again after nine months since February's 23.294 million KRW.
Seoul apartment jeonse prices fell from about 23.983 million KRW per pyeong in January this year to 22.451 million KRW in July but have been rising again since August.
By region, the average increase rate of apartment jeonse prices per pyeong in the 11 Gangnam districts last month was 0.95%, higher than the 0.82% in the 14 Gangbuk districts. In the Gangnam area, Gangseo (1.48%), Yeongdeungpo (1.45%), Gangdong (1.18%), and Songpa (1.13%) saw significant increases.
In the Gangbuk area, Yongsan rose 2.98% from the previous month, marking the largest increase among all Seoul districts. Seongbuk also recorded a 2.13% increase.
The only district in Seoul where jeonse prices fell compared to the previous month was Gwanak, which decreased by 0.18%.
Meanwhile, nationwide, the average apartment jeonse price per pyeong last month was 11.819 million KRW, up 0.64% from the previous month. The Seoul metropolitan area saw a 0.85% increase. Although Incheon's increase rate was 0.36%, below the national average, Gyeonggi's 0.95% rise pulled the metropolitan area's average above the national level.
Incheon's increase rate was 0.36%, below the national average, but with Gyeonggi rising 0.95%, the metropolitan area recorded a 0.85% increase, surpassing the national average. The five major metropolitan cities saw a modest average increase of 0.16%.
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