Monthly Rent Accounts for 67% of New Lease Contracts
Renewal Contracts Have a Monthly Rent Share of 36.8%
Last year, the proportion of monthly rent in new lease contracts for non-apartment properties such as villas and multi-family houses in the Seoul metropolitan area approached 70%.
On the 5th, real estate information company Real Estate R114 announced that it obtained these results by analyzing actual transaction data from the Ministry of Land, Infrastructure and Transport. Among newly signed lease contracts for detached houses, single-family houses, row houses, and multi-family houses in the metropolitan area last year, the share of monthly rent was 67.2%. This is 30.4 percentage points higher than the share of monthly rent in renewal contracts (36.8%). In contrast, for apartments, the difference between the share of monthly rent in new lease contracts (40.0%) and renewal contracts (36.4%) was minimal.
The proportion of tenants switching from jeonse contracts to monthly rent upon renewal also slightly increased. In the fourth quarter of last year, 8.8% of renewed non-apartment lease contracts in the metropolitan area switched from jeonse to monthly rent. This is an increase of 1.1 percentage points compared to the previous year (7.7%). The rate of switching to monthly rent in apartments decreased from 6.4% to 4.3%.
The preference for monthly rent was common across all types of housing except apartments. The share of monthly rent in all non-apartment lease contracts increased by 5 percentage points from 55.1% in 2022 to 60.1% last year. Breaking it down by housing type, the share of monthly rent in detached and single-family houses rose from 66.2% in 2022 to 69.8% in 2023, while in row houses and multi-family houses, it increased from 39.4% to 47.4%. Conversely, the share of monthly rent in apartments slightly decreased from 44.1% in 2022 to 42.5% last year.
Monthly rents are also continuing to rise. The nationwide row house and multi-family house monthly rent price index calculated by the Korea Real Estate Board reached 101.9 in December last year, marking the highest level since December 2015 when it was 101.7. The monthly rent price index has risen for ten consecutive months since March last year.
A representative from Real Estate R114 explained, "While jeonse demand continues in apartments, which have relatively lower jeonse risks such as reverse jeonse and empty jeonse, the preference for monthly rent has increased in non-apartments due to concerns over non-return of deposits. With tenants increasingly preferring monthly rent and stricter requirements for jeonse deposit insurance enrollment, landlords are also more inclined to receive monthly rent, so the preference for monthly rent is expected to continue."
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