Seoul's Rental Market Shows Unusual Surge... Largest Monthly Increase Since 2015 [Real Estate AtoZ]

Korea Real Estate Board Releases November Nationwide Housing Price Trend Survey

Last month, the increase in Seoul's monthly rent and lease prices reached the highest level since 2015. While the sharp rise in housing sales prices has somewhat slowed, this trend appears to be shifting to the rental market with a time lag.

According to the nationwide housing price trend survey for November released by the Korea Real Estate Board on December 15, the integrated index for monthly rent and lease in Seoul rose by 0.52% compared to the previous month. This rate of increase is the highest since November 2015 (0.53%). The integrated index is calculated by averaging the lease and monthly rent indices compiled by the Korea Real Estate Board, taking into account respective weights, the conversion rate between lease and monthly rent, and transaction volumes for each type.

By housing type in Seoul last month, the apartment rent and lease index recorded the highest increase at 0.64%, followed by row houses at 0.39% and detached houses at 0.25%. Given that the increases for row houses and detached houses were similar to those of the previous month, it can be interpreted that apartments led the upward trend.

Seoul city real estate agency monthly rent and lease listings bulletin board. Yonhap News

The increase in Seoul's housing rental market stands out even when compared to other regions. Last month, the nationwide integrated rent and lease index rose by 0.25%, while the five major metropolitan cities outside the Seoul metropolitan area saw an increase of 0.17%. Looking at lease and monthly rent separately, Seoul's lease prices rose by 0.51% last month, the highest since August last year (0.52%). Monthly rent increased by 0.52%, a slightly slower pace than the previous month (0.53%).

Since the beginning of this year, there has been a surge in buying activity, especially in highly sought-after areas such as Seoul's Gangnam district, causing sales prices to rise sharply. Subsequently, as the government introduced stabilization measures such as restrictions on household loans and the designation of regulated areas, the sales market has calmed down somewhat. The rental market experienced relatively less volatility during this period, but as it tends to lag behind the sales market, the price changes are now being reflected. The reduction in lease listings due to loan regulations also appears to have contributed to rising prices.

The Korea Real Estate Board explained, "In Seoul, a shortage of lease listings has emerged, while demand for rentals has remained strong, especially in popular areas such as school districts and near subway stations." In Seocho District, where the lease index rose significantly, the increase was centered on major complexes in Banpo and Jamwon-dong. In Songpa District, large complexes drove the increase, while in Gangdong District, it was mainly school district areas such as Gangil and Godeok-dong that saw higher prices.