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 and yearly rental prices reached its highest level since 2015. While the sharp rise in home sales prices has somewhat slowed, the upward 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 combined index for monthly and yearly rents in Seoul rose by 0.52% compared to the previous month. This rate of increase is the highest since November 2015 (0.53%). The combined rental index is calculated by averaging the yearly and monthly rent indices, each weighted accordingly by the Real Estate Board. It comprehensively takes into account factors such as the conversion rate between yearly and monthly rents, as well as the respective transaction volumes.

By housing type in Seoul last month, the apartment rental index saw the highest increase at 0.64%, followed by row houses at 0.39% and detached houses at 0.25%. Considering that the increases for row houses and detached houses were similar to 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 rental index rose by 0.25%, and the five major metropolitan cities outside the capital region saw an increase of 0.17%. Looking at yearly and monthly rents separately, Seoul's yearly rent index rose by 0.51% last month, the highest since August of last year (0.52%). The monthly rent index increased by 0.52%, a slightly slower rate than the previous month (0.53%).

Since the beginning of this year, a surge in buying activity in highly desirable areas such as Seoul's Gangnam district has driven sales prices up rapidly. Subsequently, the government introduced a series of stabilization measures, including household loan restrictions and the designation of regulated areas, which have somewhat calmed the sales market. The rental market experienced relatively less volatility during this period, but since it tends to lag behind the sales market, prices appear to have been adjusted accordingly. The reduction in yearly rental listings due to loan restrictions also seems to have contributed to the price increase.

The Korea Real Estate Board explained, "In Seoul, a shortage of yearly rental listings has persisted, while demand for rentals has continued to focus on preferred areas such as school districts and neighborhoods near subway stations." In Seocho District, where the yearly rent index rose significantly, the increase was centered on major complexes in Banpo and Jamwon-dong. In Songpa District, the rise was led by large apartment complexes, while in Gangdong District, school district areas such as Gangil and Godeok-dong saw the most significant increases.