Recently, due to lending regulations, the demand for housing transactions has concentrated in the rental market, leading to an increase in the proportion of monthly rent contracts for apartments in Seoul.
On the 10th, Real Estate R114 analyzed the actual transaction data of Seoul apartments for rent from 2023 to 2024 and found that the proportion of Jeonse contracts in the rental market in the fourth quarter of last year was 56.0% (30,112 cases), and the proportion of monthly rent was 44.0% (23,657 cases), showing an increase of 3.3 percentage points from the previous quarter.
Real Estate R114 noted, "The suppressed demand for transactions due to comprehensive lending regulations is opting to stay in the rental market," adding, "This can be interpreted as an increase in demand moving to the monthly rental market, influenced by the fallout from Jeonse fraud that emerged in 2022 and steadily rising Jeonse prices since May 2023."
Real Estate R114's monthly rent index also recorded a historic high of 144.47 points in the fourth quarter of last year.
Renewals of monthly rent contracts are also increasing. Looking at the proportions of contract types for monthly rent transactions of apartments in Seoul, the proportion of renewal contracts has been on the rise since the third quarter of 2023. In particular, the proportion of renewal contracts in the fourth quarter of 2024 reached 31.6%, marking the highest in the past two years.
In the case of 'Helio City' in Garak-dong, Songpa District, the area with the most rental transactions in 2023-2024, the average Jeonse deposit for an exclusive area of 84㎡ increased by about 23%, from 810 million won in the first quarter of last year to 1 billion won in the fourth quarter of the same year. Assuming the average Jeonse loan interest rate at the five major banks is 4.5% and that 80% of the deposit is borrowed, this means the monthly interest would increase from 2.44 million won to 3 million won.
In contrast, the monthly rent for the same complex and area (renewal contract) saw little fluctuation in the deposit, but the monthly rent rose from 1.26 million won to 1.78 million won, an increase of about 40%.
Despite the sharp increase in monthly rent prices, the pace of increase in the proportion of renewal contracts is accelerating. Real Estate R114 explained that this is largely due to demand that has not been able to surpass the elevated Jeonse price threshold, opting to extend existing monthly rent contracts using the right to request renewal rather than entering into new Jeonse or monthly rent contracts.
Real Estate R114 stated, "As regulations such as reducing the Jeonse loan guarantee ratio from the current 100% to 90% are anticipated, concerns are rising that the limit on Jeonse loans will be reduced. Along with tightened household loan regulations, the shortage of new apartment supply in the metropolitan area by 2025 adds to the upward pressure on Jeonse prices," and added, "As Jeonse prices rise and it becomes more difficult to secure Jeonse deposits, demand will inevitably shift more towards semi-Jeonse or monthly rent instead of pure Jeonse, so the 'monthly rentalization of Jeonse' will continue for the time being."