"Lease-Included Listings Released, But Impact on Jeonse and Monthly Rent Markets Remains 'Limited'"

Sales market gets some breathing room
but not enough to rein in jeonse and rent prices

Although the government has announced a supplementary measure regarding the temporary suspension of the heavy capital gains tax on multi-homeowners, specifically targeting so-called "lease-included listings," analysts say the impact on the jeonse and monthly rent markets will be limited.

Yonhap News Agency

According to real estate big data company Asil on the 15th, as of the 12th, the number of jeonse listings in Seoul stood at 20,523. This is a decrease of 8,938 units compared with a year earlier (29,461 units), with the decline rate reaching 30.4%. Even compared with January 22 (22,149 units), the day before President Lee Jaemyung mentioned the plan to end the temporary suspension of the heavy capital gains tax, the number fell by about 1,600 units. The contraction in jeonse listings is continuing.

Experts analyzed that, because the new supplementary measure opens an exit route for properties that had difficulty being sold due to existing tenants, the number of sale listings could increase further. However, they predicted that the structural trend of declining private rental supply will not change.

Cases in which some landlords pay tenants about 20 million to 50 million won as compensation to terminate contracts early in order to sell their homes may decrease, but many assess that this will not be enough to reverse the already ongoing decline in private rental supply.

Yoon Jihae, head of the Research Lab at Real Estate R114, said, "This measure may provide a short-term stabilizing effect for some rental transactions, but its impact on the overall market will be limited," adding, "Unless private rental supply recovers, upward pressure in the jeonse and monthly rent markets is likely to continue for the time being."

Kwon Youngseon, team leader at the Real Estate Investment Advisory Center of Shinhan Bank, also said, "The supplementary measure may increase the options for selling, but the underlying direction of decreasing jeonse supply in the rental market itself will not change," and added, "Given that the amount of rental housing that the public sector can supply in a short period is limited, it will not be easy to alleviate the perceived burden in the tenant market."

As jeonse supply decreases, prospective tenants are feeling intensifying competition. According to KB Real Estate Data Hub, the Jeonse Outlook Index for January this year was 125.79, the highest level since December 2020 (133.43). The Jeonse Outlook Index is based on 100, with higher figures indicating that demand for jeonse exceeds supply.

By district, the decline in jeonse listings is particularly pronounced in areas where sale, jeonse, and monthly rent prices have been relatively low and where a high proportion of actual end-users, such as newlyweds, reside. In Seongbuk District, jeonse listings plummeted 90.2%, from 1,302 a year ago to 128. In Gwanak District, they fell from 762 to 172 (-76%); in Dongdaemun District, from 1,550 to 457 (-71%); in Jungnang District, from 334 to 104 (-69%); and in Gangdong District, from 3,209 to 1,018 (-68.3%). The Jeonse Outlook Index for the 14 districts north of the Han River was 130.20, higher than the 11 districts south of the river (121.85).

With demand continuing to dominate, prices are also trending upward. The average jeonse price in Seoul as of December last year was 463.95 million won, up about 20 million won from January last year (443.86 million won). As those unable to secure jeonse turn to monthly rentals, competition in the monthly rent market is also intensifying. The average monthly rent in Seoul rose about 8%, from 1.12 million won in January last year to 1.21 million won at year-end.

Lee Eunhyeong, senior researcher at the Korea Institute of Construction Policy, said, "The upward trend in jeonse prices is likely to continue for the time being," adding, "The regulatory stance on multi-homeowners and rising sale prices are combining to put pressure on the jeonse market."