Prolonged real estate sales slump… Concerns over rent shortages as spring and new semester approaches

Prolonged real estate sales slump…  Concerns over rent shortages as spring and new semester approaches

Increasing anxiety in the jeonse market

Demand for rent increases in areas with good school districts
Mok-dong, Seoul reported price renewed in the 2 billion won range

The impact of lower interest rates on jeonse loans
Existing tenant renewal contracts are also increasing.
Prices continue to rise due to seasonal factors
National jeonse rate highest in 10 months

Mr. Kim (39), who lives in Yongsan-gu, Seoul, gave up looking for a new apartment for lease in Singil New Town, Yeongdeungpo-gu, but renewed his existing lease contract. The rental price for a 59.98㎡ exclusive apartment that Mr. Kim looked into has risen sharply from the 400 million won range early last year to the 600 million won range recently. If there were a lot of properties for rent, I would have found the next best solution, but even that didn’t work.

The representative of a real estate agent operating in Yeongdeungpo-gu said, “The number of people looking for jeonse properties has increased sharply compared to previous years ahead of the spring moving season, but the number of jeonse properties has decreased by less than half compared to last year.” He added, “It is not easy to buy and sell, and interest rates on jeonse loan funds are low. “As the market is losing ground, demand for jeonse is increasing,” he said.

A real estate property in downtown Seoul on the 12th. Newsis

Ahead of the new semester and spring moving season, jeonse prices are rising in major regions across the country, especially in Seoul. In particular, as the number of people looking for a rental property increases, especially in areas where demand for school districts is relatively high, even rental properties reported in the 2 billion won range appeared in Mok-dong, Yangcheon-gu, Seoul.

According to the Ministry of Land, Infrastructure and Transport’s Actual Transaction Disclosure System on the 12th, a 161㎡ exclusive lease contract for ‘Mokdong Trapalace Eastern Avenue’ in Yangcheon-gu was signed last month for 2 billion won (38th floor). The previous highest price for a 161㎡ unit in the same complex was 1.48 billion won, which was signed in October 2016.

A 204㎡ lease contract for ‘Mokdong Hyundai Hyperion’ in the same area was also signed for 1.9 billion won (1st floor) in November last year. The contract for this exclusive 154㎡ apartment was renewed in November last year at the highest rental price of 2.05 billion won (25th floor), and the same apartment was leased for 2 billion won (13th floor) in December last year.

The reason why such high-price rental contracts were concluded mainly in Mok-dong is interpreted as the result of the increase in the number of people looking for rental properties in areas with relatively high demand for school districts. An official from the Korea Real Estate Board explained, “Due to uncertainty in the sales market, those waiting to buy have switched to jeonse, and the number of renewal contracts for existing tenants has increased, leading to a continued upward trend centered on preferred complexes such as those near school districts and stations.”

Due to seasonal effects, jeonse prices in other regions are also generally on the rise. According to statistics from the Real Estate Institute, as of the first week of February, apartment rental prices in Seoul increased 0.07% compared to the previous week.

The jeonse price ratio, which refers to the jeonse price compared to the sale price, is also increasing. The Real Estate Institute announced on this day that the average rent rate for apartments nationwide in December last year was 66.8%, the highest in 10 months since February of last year (66.9%). The national average apartment rent rate was 75.2% in January 2018, the highest since the 2012 survey, and then began to decline, falling to 66.1% in August of last year. Then, starting in the second half of last year, rental prices turned upward. The average rent rate for apartments in Seoul was 53.7%, the highest in 11 months since January last year (54.7%).

As the real estate transaction market enters a cooling period due to high interest rates, more people are choosing to lease rather than sell, which appears to be a factor pushing up jeonse prices. Real estate information company Kyeonggi Man Lab reported that last year, the volume of apartment lease and monthly rent transactions across the country was counted at 1,229,443. This is the highest figure since 2011, when the survey of apartment lease and monthly rent transactions began. Among these, the jeonse transaction volume was 701,552. This is the highest ever, about 16% higher than the previous highest of 607,426 (2021).

Reporter Beomsu Kim [email protected]

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