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
Expert

The number of jeonse (long-term lease) apartment listings in Seoul has dropped below last year's lowest point. This is the exact opposite of what the Ministry of Land, Infrastructure and Transport predicted three months ago when it announced the "October 15 Real Estate Measures" and expressed confidence in the stability of the jeonse and monthly rental markets. Analysts attribute this to the paralysis of jeonse supply after all of Seoul was designated as a Land Transaction Permission Zone (LTPZ) at that time. With a sharp decline in new apartment supply and an increase in contract renewals, the jeonse market has emerged as a key 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.

Aftershocks in the Jeonse Market from LTPZ Expansion

According to the real estate information platform Asil on January 2, there were 22,677 jeonse apartment listings in Seoul 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 October 15 measures designated all of Seoul as a "triple-regulation zone," including the Land Transaction Permission Zone. With a two-year mandatory occupancy requirement, gap investment (purchasing with a jeonse tenant in place), which was a source of jeonse supply, has been completely blocked.

The paralysis of jeonse supply was a foreseeable result 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 press briefing on November 12 last year that "the volatility in the jeonse and monthly rental markets is not significant, and there is no evidence of impact from the LTPZ designation." The briefing was intended to address controversies over the selective use of Korea Real Estate Board statistics in policy making. At the time, Director Kim even cited statistics indicating that jeonse listings in Seoul had increased to around 26,000 according to Asil, arguing, "In fact, jeonse listings have recently increased."

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

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

Ham Youngjin, Head of Real Estate Research at Woori Bank, analyzed, "The clear decline in Seoul jeonse listings is the result of the expansion of LTPZs blocking gap investments and thus cutting off jeonse supply, combined with the increased use of contract renewal rights." He added, "Since jeonse supply is directly affected by new housing completions, a worsening shortage of jeonse listings this year could drive more real demanders to purchase homes."

The number of new apartment completions in Seoul is expected to plummet to 29,195 units this year, down 31.4% from last year's 42,577 units. As tenants facing supply shortages opt for contract renewals instead of new leases, a 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 surged to 41.7%, up 10.3 percentage points from 2024. Among tenants renewing contracts, the proportion exercising the right to request contract renewal also increased from 32.6% in 2024 to 49.3% last year.

Park Wongap, Senior Real Estate Expert at KB Kookmin Bank, stated, "The current problem in the jeonse market is not so much price, but the lack of available listings." He explained, "Blocking gap investments has reduced jeonse supply, which is leading to greater housing instability and rising housing costs due to the 'conversion of jeonse to monthly rent.'" 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 reform. If supply remains insufficient, instability in the jeonse market could affect not only the first half of this year but also extend into next year."