Since the start of the year, the nationwide apartment jeonse price growth rate, including the Seoul metropolitan area, has noticeably outpaced the sale price growth rate.
According to the Korea Real Estate Board (REB) on May 11, the cumulative growth rate of nationwide apartment jeonse prices this year was 1.56% as of the first week of May, exceeding the sale price growth rate (0.98%) by 0.58 percentage points.
In the metropolitan area, the jeonse growth rate (2.20%) was 0.41 percentage points higher than the sale price growth rate (1.79%), and in non-metropolitan areas, the jeonse growth rate was 0.94%, 0.74 percentage points higher than the sale price growth rate (0.20%).
In Seoul, the sale price growth rate (2.81%) still outpaces the jeonse growth rate (2.61%), but the gap has steadily narrowed and recently shrank to 0.20 percentage points. In the first week of May, Seoul apartment jeonse prices rose 0.23% from the previous week, the highest level since the third week of Nov. 2015 (0.26%).
The area with the highest cumulative rise in jeonse prices was Yeongtong District of Suwon, Gyeonggi (4.57%), followed by Dongan District of Anyang, Gyeonggi (4.53%), Muan County, South Jeolla (4.39%), Seongbuk District, Seoul (4.20%), Giheung District of Yongin, Gyeonggi (4.16%), Gwangmyeong, Gyeonggi (4.08%), Nowon District, Seoul (4.06%), Suji District of Yongin, Gyeonggi (3.90%), Gwangjin District, Seoul (3.82%), and Dongtan District of Hwaseong, Gyeonggi (3.82%).
In the three Gangnam districts, sale prices were weak while jeonse prices climbed relatively steeply. In Seocho District, sale prices rose 1.00% this year, while jeonse prices rose 3.65% over the same period. In Gangnam District, the sale price growth rate was -0.38%, but the jeonse price growth rate was 0.84%. Songpa District (sales 1.37%, jeonse 2.09%) showed a similar pattern.
Yongsan District (1.13%, 2.36%) showed the same. In Nowon District, even though the sale price growth rate was high at 3.48%, the jeonse price growth rate (4.06%) outpaced it.
The rapid pace of jeonse price gains is due to the acceleration of the "conversion of jeonse to monthly rent" and a decline in jeonse listings caused by regulations on multiple-home owners. The supply of new move-ins is also sharply decreasing. According to data released in Feb. by the Korea Real Estate Board (REB) and Real Estate R114, the number of apartment move-ins in Seoul this year is 20,758 households, and it will fall to 17,197 households next year.
Nam Hyuk-woo of the Woori Bank Real Estate Research Institute said, "With a shortage of new move-ins, the rapid decline in jeonse listings due to the shift to monthly rent is speeding up the price strength," adding, "Some jeonse and monthly rent listings are decreasing due to regulations on multiple-home owners, and if regulations extend to non-resident single-home owners, this trend could become a little stronger."