As apartment sale prices in Seoul have surged sharply, the jeonse-to-sale price ratio, known as the "jeonse rate," has fallen to a record low. Although jeonse listings have dried up and jeonse prices are rising, analysts say the jeonse rate has stayed around 50% because the rise in home prices has far outpaced it.
According to the KB Real Estate monthly time-series statistics on dwellings on Jan. 22, the jeonse rate for Seoul apartments stood at 50.92% in January. That is the lowest since May 2023 (50.87%), when home prices were falling.
In particular, key areas of Seoul such as the three Gangnam districts (Gangnam, Seocho, and Songpa) and Yongsan have plunged into the 30%–40% range, leading the decline in the jeonse rate. By district, Dongjak fell from about 56% in February last year to about 49% in January this year, a drop of more than 6 percentage points. It was followed by Songpa (about 40%), Seocho (about 42%), Yangcheon (about 46%), and Gangnam (about 38%) with larger declines.
The jeonse rate in nine key districts in Seoul, including Seocho, Songpa, and Gangdong, hit an all-time low since statistics began in 2013. This is because, amid expectations of interest rate cuts and a preference among dwelling buyers for a "single smart home," sale prices have risen more than three times faster than jeonse prices.
Although the jeonse rate has fallen, the jeonse shortage in the rental market has worsened. Seoul apartment jeonse listings have plunged about 34% in a year. According to the big data real estate platform Asil, Seoul apartment jeonse listings dropped from 28,942 on Feb. 20 last year to 19,242 on Feb. 20 this year, a decrease of nearly 10,000.
By district, Seoul's Seongbuk saw jeonse listings fall about 91%, from 1,326 to 124, the largest decline. It was followed by Gwanak (about 78%), Jungnang (about 72%), Dongdaemun (about 72%), Gangdong (about 70%), Nowon (68%), Gwangjin (about 68%), Gangbuk (about 66%), Dobong (about 65%), and Eunpyeong (about 64%).
Some analysts say the right to request contract renewal has contributed to the low jeonse rate. Shim Hyeong-seok, head of the Udabang Research Institute (U.S. IAU professor), said, "About 49.3% of Seoul apartment rental contracts last year used the right to request renewal, capping the increase rate within 5%," and noted, "Sale prices reflect market prices as they are, so the gap has widened significantly."
However, there is a possibility that the jeonse rate for Seoul apartments will rebound again starting in the second half of this year. Professor Shim said, "The number of Seoul apartments scheduled for occupancy this year is about 10,000 households, but excluding 6,000 to 7,000 union-member households, the actual supply to the market is only 3,000 to 4,000," and explained, "That is just one-tenth of the 10-year cycle average of about 40,000 households in Seoul." He analyzed, "With a sharp drop in occupancy volume, jeonse prices will rise, and if sale prices increase less than last year, the jeonse rate is likely to trend upward."
Ham Young-jin, head of the Real Estate Research Lab at Woori Bank, also said, "The rental market is heavily influenced by government systems and supply and demand, so we must consider fewer move-ins, the shift from jeonse to monthly rent, and regulations on jeonse loans," and predicted, "In Seoul, sale prices have still risen more than jeonse prices, but if the pace of sale price gains slows, the jeonse rate can rise." Ham added, "The jeonse rate for Seoul apartments will rise, but it will not jump more than 10% to the point where reverse jeonse occurs."