Seoul Apartment Jeonse Prices Surpass 600 Million Won; Shift to Monthly Rent Accelerates

The average jeonse price for apartments in Seoul has surpassed 600 million won for the first time in three years and four months. As of March, the average stood at 601.49 million won, an increase of 3.26 million won from the previous month.

A significant decrease in jeonse listings is accelerating the shift towards monthly rent. The decline in jeonse supply is attributed to a combination of factors, including stricter loan regulations, property tax burdens, an increase in landlords converting to monthly rent, and moves to reduce jeonse loan guarantees. This reduction in jeonse listings has also driven up jeonse prices.

This year, monthly rent contracts accounted for 48.3% of all apartment lease agreements in Seoul. This is a substantial increase from 28.2% in 2019. The structure of the rental market is rapidly changing, with landlords converting to partial-rent (banjeonse) and tenants increasingly opting for monthly rent contracts. According to data from the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, 67,506 apartment lease contracts were registered in Seoul this year as of the previous day. Of these, 32,608, or 48.3%, were monthly rent contracts. The proportion of monthly rent contracts has steadily risen over the past few years, from 28.2% in 2019.

In Sadang-dong, Dongjak-gu, Seoul, a jeonse transaction of 700 million won was recorded. Partial-rent contracts, involving a security deposit between 400 to 600 million won plus monthly rent, are also being processed. A local real estate agent reported that the scarcity of jeonse properties is compelling landlords to switch to partial-rent, creating a realistic situation where tenants have no choice but to accept monthly rent contracts.

A research director at RE114, a real estate analytics firm, analyzed that both the government, landlords, and tenants show a clear tendency to prefer monthly rent over jeonse. The market is gradually shrinking as jeonse loan regulations aimed at managing household debt, declining landlord profitability, and tenants' reluctance to enter jeonse agreements converge.