Ministry of Land's "No Issues in Jeonse Market" Claim Exposed in a Month... Disappearance of Listings Becomes a Trigger for Housing Price Instability [Real Estate AtoZ]

Seoul Jeonse Listings Fall Below 23,000, Breaking Last Year's Record Low
Listings Down 6.9% from 10·15 Benchmark
Ministry's "Market Stability" Claims Reversed in Just Over a Month
Supply Shrinks as New Completions Drop and Renewals Rise
Experts: "A Key Factor That Could Shake Housing Prices This Year"

The number of jeonse (long-term lease) apartment listings in Seoul has fallen below last year's lowest point. This is the exact opposite of what the Ministry of Land, Infrastructure and Transport had assured about the stability of the jeonse and monthly rental market after announcing the "10·15 Real Estate Measures" three months ago. Analysts say that the designation of the entire city of Seoul as a Land Transaction Permission Zone (Toheoguyeok) at the time effectively paralyzed the supply of jeonse units. The jeonse market, affected by a sharp drop in new housing supply and a rising proportion of contract renewals, has now emerged as a potential trigger for housing price instability this year.

A rental notice board for a property in Seoul with an X mark on the jeonse (long-term lease) information. Photo by Dongju Yoon.

Aftermath of Land Transaction Permission Zones Hits Jeonse Market

According to the real estate information platform Asil on January 3, the number of jeonse apartment listings in Seoul stood at 22,677 as of the previous day. This is even lower than the lowest point last year, which was 22,712 listings on September 2. Compared to October 15 last year, when the real estate measures were announced (24,369 listings), the number has dropped by 6.9% in just over two months. The 10·15 measures designated the entire city of Seoul as a "triple-regulation zone," including the Land Transaction Permission Zone. With a two-year mandatory residency requirement, gap investments (sales with tenants in place), which had been a source of jeonse supply, were completely blocked.

The paralysis of jeonse supply was a foreseeable outcome of the government's one-sided regulatory approach. However, Kim Kyucheol, Director General for Housing and Land Policy at the Ministry of Land, Infrastructure and Transport, emphasized at a briefing on November 12 last year that "the volatility in the jeonse and monthly rental market is not significant, and the impact of the Land Transaction Permission Zone designation has not been confirmed." The briefing was intended to address controversies over the selective use of Korea Real Estate Board statistics in policy making. At that event, Director Kim even cited statistics showing that jeonse apartment listings in Seoul had increased to around 26,000 according to Asil, arguing, "Recently, the number of jeonse listings has actually increased."

Government: "No Impact on Listings" vs. Falling Supply and Rising Jeonse Prices

Just a month after the government's confident statements, the situation has reversed. The depletion of listings and rising prices continue. In December alone, 2,212 jeonse apartment listings disappeared from the Seoul market. According to the Korea Real Estate Board, the weekly increase in Seoul apartment jeonse prices ranged from 0.14% to 0.16% throughout December. While this is similar to the rate of increase in the third and fourth weeks of October (0.13% to 0.14%) immediately after the measures, experts predict that the sharp recent decline in listings will intensify upward pressure on prices.

Ham Youngjin, Head of Real Estate Research Lab at Woori Bank, analyzed, "The clear decline in Seoul's jeonse listings is the result of the expanded designation of Land Transaction Permission Zones blocking gap investments and thus cutting off jeonse supply, combined with the increased use of renewal rights. Since jeonse supply is directly affected by new housing completions, a worsening shortage this year could drive more end-users to buy homes."

The number of new apartment units to be completed in Seoul this year is expected to be 29,195, a sharp 31.4% drop from last year's 42,577 units. As tenants facing a supply shortage opt for contract renewals instead of new leases, the vicious cycle of listing depletion continues. According to the Ministry of Land, Infrastructure and Transport's actual transaction price system, the proportion of jeonse and monthly rental contract renewals in Seoul last year was 41.7%, a jump of 10.3 percentage points from 2024. Among tenants renewing contracts, the proportion exercising the right to request renewal also rose from 32.6% in 2024 to 49.3% last year.

Park Wongap, Chief Real Estate Expert at KB Kookmin Bank, stated, "The current issue in the jeonse market is not so much the price, but the lack of available listings. The blocking of gap investments has reduced jeonse supply, leading to increased housing instability and higher housing costs due to the conversion of jeonse to monthly rentals." He added, "The two key variables that will shake up the real estate market this year are the direction of the jeonse market and tax reforms. If supply remains insufficient, instability in the jeonse market could affect not only the first half of this year but extend into next year as well."