Trying to Rein in Home Prices, But Rents Surge: "Over 2% Jump in Regulated Areas After October 15 Measures" [Real Estate AtoZ]

Jiptos Analysis: 2.8% Rise in 21 Seoul Districts
Conflicting Data from R114, KB, and Korea Real Estate Board Causes Market Confusion

Since the implementation of the October 15 Housing Market Stabilization Measures, apartment rental prices in regulated areas have surged by more than 2% within a month.

According to an analysis by ZipToss, a real estate brokerage and analytics firm, of the Ministry of Land, Infrastructure and Transport’s actual transaction data released on the 23rd, rental prices in areas newly designated as regulated zones and land transaction permit zones under the October 15 measures have risen sharply. The average rental price in 21 districts of Seoul increased by 2.8%, while the average in 12 cities and districts in Gyeonggi Province rose by 2.0%.

Given that the rate of increase in sales prices for areas newly designated as regulated or land transaction permit zones, as previously analyzed by ZipToss, was 1.2%, the rise in rental prices in Seoul has exceeded double the rate of increase in sales prices.

Rental Price Growth Outpaces Sales Price by Double

Concerns are emerging that the rental market may disappear following the government's announcement of the "Housing Market Stabilization Measures," which impose triple regulations across Seoul and parts of Gyeonggi Province. On the 16th of last month, an "X" mark was placed on the rental notice of a real estate listing board in Mapo, Seoul. Photo by Yoon Dongju

This analysis compares rental transactions for identical complexes and identical unit sizes during the one-month periods before and after the implementation of the triple regulations (adjustment area, speculative overheating district, land transaction permit zone), using October 20 of last month as the reference date (pre-implementation: September 20-October 19; post-implementation: October 20-November 19).

In fact, record-high rental prices are being reported in major complexes.

For example, a 111.73-square-meter unit in Lotte Castle Cheonjiin, Sungin-dong, Jongno-gu, Seoul, was leased on October 24 under the contract renewal right at a deposit of 772.5 million won, which is 22.5 million won higher than the previous deposit.

Additionally, a 95.99-square-meter unit in Booyoung 3rd Complex, Mok-dong, Yangcheon-gu, Seoul, was newly leased on November 7 at 1.2 billion won. This is 200 million won higher than the previous record high of 1 billion won just five months ago.

Sharp Decline in Rental Listings Due to Gap Investment Ban

The three Gangnam districts (Gangnam, Seocho, and Songpa) and Yongsan-gu, which were already regulated areas, also saw rental prices rise by 2.7% after the announcement of the measures. In Gaepo-dong, Gangnam-gu, Seoul, a 102.57-square-meter unit in Gaepo Xi Residence was newly leased on October 26 for 2 billion won, more than 250 million won above the previous record set in August.

Experts believe that the sharp decline in rental listings, which pushed up prices, was caused by the ban on gap investment-buying a home with a tenant in place-after regulated areas were designated as land transaction permit zones under the October 15 measures.

Lee Jaeyoon, CEO of ZipToss, said, "The strong regulations aimed at controlling the sales market are instead disrupting the supply-demand balance in the rental market, driving up rental prices. Unless a solution emerges to ease the shortage of new rental listings, the rental crunch and rising prices in key areas of Seoul are likely to persist for an extended period."

Weekly Price Trends Diverge by Survey Agency

Meanwhile, conflicting statistics from government and private price survey agencies are causing confusion in the market regarding the effects of the October 15 measures.

The private firm Real Estate R114 announced that Seoul apartment prices turned downward in the third week of this month (November 17-21), falling by 0.05% for the first time in 19 weeks. However, another private survey agency, KB Kookmin Bank, reported a 0.23% increase.

In contrast, the government-certified Korea Real Estate Board announced that Seoul apartment prices rose by 0.20% in the third week of this month (as of November 17), with the rate of increase accelerating compared to the previous week.

This statistical confusion is attributed to differences in survey methodologies, periods, and announcement timings among the agencies.