"Because the owner grandmother lives alone, you will use one room and the living room bathroom independently on a share concept. Female students, office workers, and those who will live alone are welcome."
This is a monthly rental listing for a Doosan We've apartment near Dapsimni Station in Dongdaemun District, Seoul, recently posted on Naver Pay Real Estate. It is an 84㎡ exclusive-use apartment with three rooms and two bathrooms, offered at a deposit of 20 million won and monthly rent of 450,000 won, which is quite a bold term. Compared with a transaction for the same apartment with the same size in Jan. at a deposit of 100 million won and monthly rent of 1.95 million won, it is roughly a quarter of the price. You live with the owner and share the kitchen and living room, but you can use the bathroom in front of the room. In Jan., there was also a listing in the Maple Xi apartment with an exclusive area of 59㎡ in Seocho District, Seoul, to rent one room at a deposit of 30 million won and monthly rent of 1.4 million won.
The response is not bad. On online communities, such one-room monthly rental listings in apartments became a hot topic, and positive reactions predominated, such as "If maintenance fees are included, it's a great value" and "It seems doable as long as there's no interference." Of course, there are concerns like "With one door, it might feel awkward coming in late at night," but demand remains steady as jeonse and monthly rental listings have dried up. This listing, too, appears to have found a tenant, as it has been taken down from Naver Pay Real Estate.
Korea's housing market has entered a "new normal" era in which the center of gravity is shifting from jeonse to monthly rent. According to the Ministry of Land, Infrastructure and Transport on the 24th, among 253,410 nationwide dwellings jeonse and monthly rent transactions in Jan., the share of monthly rent (including semi-jeonse) hit a record high of 66.8% (169,305 cases). In Seoul, monthly rent accounted for 66.8% of lease transactions (based on the Court Registration Information Plaza). As recently as four to five years ago, the monthly rent share hovered around 50%, but forecasts now say it will soon top 70%.
From landlords' perspective, increasingly stringent jeonse loan requirements and considerations to raise holding taxes, among other successive regulations, became decisive triggers for shifting to monthly rent. Under the June 27 loan regulation last year, jeonse loans conditional on transfer of ownership were banned, and when using a mortgage loan, an owner-occupancy requirement was imposed, making it difficult for so-called "gap investing (purchases with jeonse tenants in place)" properties to come to market. Also, due to interest rate hikes and tax burdens, more owners want stable monthly rent revenue rather than deposits.
A shift in perceptions among some tenants is also a factor. In the past, jeonse was seen as a way to safely protect a large sum as savings, but recently, especially among people in their 30s and 40s, more are choosing monthly rent to lower the deposit and investing the remaining lump sum in stocks or virtual assets. For example, on social media, a post gained traction saying an acquaintance who had lived on jeonse moved to a place with 2 million won monthly rent and invested the entire 400 million won jeonse deposit in QQQ. QQQ is an exchange-traded fund (ETF) that tracks the tech-heavy Nasdaq-100 Index.
A new coinage, jip-pal-bisa (sell the house and buy Bitcoin), has also emerged. It reflects the claim that, especially for those living in provincial apartments where prices have barely risen, moving into a new apartment on monthly rent nearby and investing the sale proceeds in Bitcoin yields a higher return. Similar terms include jip-pal-tesa (sell the house and buy Tesla), all suggesting putting housing expense into stocks.
Near universities, boarding houses like those seen in the tvN drama "Reply" series have been popular again for quite some time. This is the result of rising monthly rents for one-room units near campuses coupled with high inflation. According to the real estate platform Dabang, as of Jan. this year, the average monthly rent for one-room units near Sungkyunkwan University was 738,000 won, up 18.1% from a year earlier. The average monthly rent for one-room units near 10 major universities in Seoul also reaches 622,000 won.
Some students who cannot afford monthly rent often live in gosiwon. A person surnamed Jeon (23), who attends a four-year university in Dongdaemun District, Seoul, said, "As the number of international students increases, it has become even harder to find not only dorms but also one-room places around campus," and added, "Even trying to get into a chain-type gosiwon that is relatively well managed is popular, so you have to reserve quickly." Jeon continued, "Some places even operate a 'semester reservation system,' where they accept you only if you promise to move in next semester and put down a reservation fee, even if you vacate the room during the vacation."
Woo Seok-jin, a professor in the Department of Economics at Myongji University, said, "Because there is not much dwellings supply, jeonse stock decreased from the start, and with interest rate cuts and a reduction in policy funds, demand has also failed to support the market, causing jeonse to disappear," and added, "It is also true that the housing expense burden is growing that much, so the government needs to prepare meticulous measures for housing stability."