"The tenant has to move out in May, but I still haven't found a place, so I'm stuck. Starting in March, it's really going to be chaotic."
This is a comment on a post recently uploaded to a real estate community. A post titled "It looks like the jeonse crunch will blow up much worse than expected" listed available properties at Lotte Castle Gold Park 1 in Geumcheon-gu, Seoul, and Yaksu Heights in Jung-gu. Most of the complexes had 1,000 to 2,000 units, but the number of jeonse listings currently online was in the single digits or even "0."
Following the impact of the government's tough real estate regulations, the acceleration of the shift from jeonse to monthly rent is making jeonse listings disappear. With this situation, jeonse prices keep rising, and concerns about a jeonse crunch are growing louder.
According to Naver Pay Real Estate on the 25th, there are only two jeonse listings for Gwanak Dream Town in Bongcheon-dong, Gwanak-gu, Seoul. The 114-square-meter exclusive area unit is 740 million won, and the 84-square-meter unit is 590 million won. Even in Gwanak-gu, where jeonse demand is steady, Gwanak Dream Town is a popular large complex with 3,544 units. Just two months ago, there were more than 10 jeonse listings, but they have all vanished, leaving only two.
Raemian Gireum Centerpiece in Gireum-dong, Seongbuk-gu, which has 2,352 units, also has only two jeonse listings. Both were posted the previous day, with the 84-square-meter exclusive area unit at 1.1 billion won and the 59-square-meter unit at 720 million won. The same sizes were transacted at 800 million won from June to Nov. last year, but prices then rose quickly, and on the 10th a contract was signed at a record high of 930 million won. In a little over 10 days, asking prices climbed by nearly 200 million won.
A licensed real estate agent in Seongbuk-gu said, "I've never seen jeonse listings this scarce, and even the ones that do come up occasionally have risen so much that prospective tenants feel burdened," adding, "Landlords also prefer monthly rent over jeonse, where regulations are strict, for profitability, so I think there's a real possibility of a jeonse crunch in March."
In fact, according to real estate big data firm Asil, as of the 23rd there were 18,683 jeonse listings for apartments in Seoul. That is about 15.7% fewer than a month earlier (22,156). The decline was particularly steep in the outer areas of Seoul, where home prices are relatively low. Dobong-gu had the largest decrease at minus 34.8%, followed by ▲ Nowon-gu (minus 33.4%) ▲ Mapo-gu (minus 32.7%) ▲ Gwanak-gu (minus 30.6%).
Behind the disappearance of jeonse listings lies a structural supply shortage, but the government's regulatory impact plays a big part. The June 27 measures last year blocked jeonse loans contingent on ownership transfer, and the Oct. 15 measures imposed a two-year owner-occupancy requirement, shutting down gap investing (purchases with existing jeonse tenants). On top of this, as jeonse prices rose, more existing tenants renewed their contracts, and the supply of newly built apartments in Seoul declined.
In this situation, strengthened regulations on owners of multiple homes this year created another reason for jeonse listings to fall. Ahead of the end of the capital gains tax surcharge deferral for multiple-home owners on May 9, these owners are putting properties with jeonse tenants on the market to avoid it. In addition, the government is reviewing a plan to restrict loan extensions, following limits on capital gains tax reductions for registered rental business operators.
A licensed real estate agent in Gwanak-gu said, "There are a series of cases where tenants who have already lived in a jeonse home for two years are being notified to move out with moving expenses because the landlord, who owns multiple homes, says the home must be sold," adding, "With things like this, some tenants are exercising their right to request contract renewal in advance, even with more than four months left until the end of the jeonse term, out of concern that renewal will be difficult."