[2026 Outlook] "This Year's Jeonse Price Increase Will Surpass Last Year"... Supply Cliff Triggers Vicious Cycle in Housing Prices [Real Estate AtoZ]

All Experts Predict Jeonse Price Increases...
"Not a Single Opinion for Decline or Stabilization"
Top Cause of Jeonse Supply Instability: "Cumulative Supply Cliff" (54.1%)
Absolute Variable for Home Price Increase Is Also 'Supply Shortage'...

This year, the increase in jeonse prices is expected to surpass last year's level, marking the beginning of a vicious cycle that could further stimulate housing prices. Experts predict that, with the nationwide sharp decline in housing listings and a decrease in new housing supply, the resulting 'supply shock' will further destabilize the rental market.

Concerns Over the Nationwide Spread of the 'Vicious Cycle' of Jeonse Prices Pushing Up Home Sale Prices

In this survey, all respondents predicted a "rise in jeonse prices," reflecting growing concerns over a supply shock. Of the respondents, 72.2% (26 people) said, "The increase in jeonse prices will be greater than last year." The remaining 27.8% (10 people) also chose "an increase (but with a smaller rise than last year)." Not a single expert predicted a decline or stabilization in the jeonse market. In particular, they expected that, in Seoul, jeonse prices would rise even more steeply than home sale prices, leading to a sharp increase in the jeonse-to-sale price ratio.

When asked about the main cause of instability in the jeonse supply, 55.6% (20 people) cited "the cumulative shortage of new housing supply" as the primary reason. This was followed by increased end-user demand as potential buyers remain in the rental market (22.2%, 8 people), and a shortage of listings due to government regulations (11.1%, 4 people). Other reasons included the concentration of demand in apartments (8.1%, 3 people), lease contract expirations due to the two major lease laws (2.7%, 1 person), and a decrease in the proportion of multi-homeowners (2.7%, 1 person).

One expert who participated in the survey stated, "The core reason for the instability in the jeonse supply is the structural shortage caused by a cumulative decline in housing permits and construction starts in recent years, which has reduced the actual number of new homes available." They added, "While weakened buying sentiment, the concentration of demand in apartments, and institutional factors also play a role, the most fundamental issue is the lack of new housing in the market." According to the Korea Real Estate Board and Real Estate R114, the nationwide supply of new homes this year is expected to be 206,923 units, a 21.4% decrease from last year. In Seoul, the number will drop from 46,767 to 28,885 units, a 38.2% reduction.

The 'sharp decline in jeonse listings,' a precursor to supply shortages, is already a nationwide phenomenon. According to Asil, over the past year, the number of jeonse listings in Seoul has decreased by 27.6%, reaching an all-time low. The situation is also severe in regional metropolitan cities. Over the past year, Daejeon lost as much as 58.1% of its jeonse listings, and Sejong saw a 57.6% decrease, indicating an extreme shortage. Major cities such as Busan (-44.2%), Daegu (-37.9%), and Gwangju (-30.4%) all experienced declines of over 30%, forcing jeonse tenants into the monthly rental market.

The rise in jeonse prices is also expected to further destabilize the home sale market. Last year, in the provinces, a pattern emerged where jeonse prices rose first, followed by an increase in sale prices-a pattern that is likely to spread nationwide this year. The concern is that supply shortages will push up jeonse prices, and as the jeonse-to-sale price ratio rises, home sale prices will be stimulated again, creating a vicious cycle. In the nationwide home sale price outlook survey, 63.9% (23 people) of respondents said, "Prices will rise, but the increase will be smaller than last year," while 27.8% (10 people) predicted "a greater increase than last year." Only a small minority expected stabilization (5.6%, 2 people) or a decline (2.8%, 1 person).

The gap between regions is expected to widen further. When asked about the gap between the Seoul metropolitan area and the provinces, 69.4% (25 people) of experts predicted "further widening." Seven people (19.4%) expected "the current level to be maintained," while four (11.1%) predicted "the gap will narrow." While the jeonse shortage is a nationwide issue, the polarization is expected to continue, with home buying demand still concentrated in preferred areas with proven asset value.

86% of Experts Say "The Only Way to Stabilize the Market Is to Substantially Increase Supply"

This year, the absolute variable driving the market is not finance or policy, but the "supply of new housing." As the main factor behind the rise in home prices, 64.9% (24 people) of experts pointed to "worsening supply shortages in urban areas." This was followed by a shortage of listings (16.2%, 6 people), a base interest rate cut (8.1%, 3 people), price increases in key areas (8.1%, 3 people), and the balloon effect caused by regulations (2.7%, 1 person).

When asked to rate the impact of supply shortages on market prices on a scale of 1 to 5, 80.5% of experts chose 4 (44.4%, 16 people) or 5 (36.1%, 13 people). The average score given by experts was 4.11, indicating that the supply-demand imbalance is a serious problem. Six people (16.7%) gave a score of 3, and one person (2.8%) gave a score of 1.

In contrast, the main downward pressures on the market were cited as macroeconomic downturns (50.0%, 18 people) and strong lending regulations (27.8%, 10 people). This suggests that even the factors driving prices down are expected to be more influenced by macroeconomic constraints than by government policy. Fatigue from rapid price increases (11.1%, 4 people), delays in interest rate cuts (5.6%, 2 people), the possibility of expanding regulated areas, and the possibility of tax reforms were each cited by one person (2.8%).

When asked whether government regulatory policies are contributing to market stabilization, experts gave an average score of just 2.3 out of 5. Negative responses such as "1 point (very low, 27.8%)" and "2 points (low, 30.6%)" accounted for 58.4% of all responses. Eleven people (30.6%) gave a neutral score of 3, while 4 people (11.1%) gave a score of 4, and no one gave a score of 5.

As the top policy priority for stabilizing the market, 86.1% (31 people) of respondents called for "expanding supply in Seoul and the metropolitan area." In contrast, only a small number of experts prioritized tax reforms such as changes to property holding taxes (13.9%, 5 people). Of the five who selected tax reform, four called for strengthening property holding taxes, while one called for easing them.

One expert who participated in the survey emphasized, "At this point, the only card that can stabilize the market is supply," adding, "The government must continuously send visible and tangible supply signals to the market in order to quell the market instability triggered by the jeonse shortage."