Anxiety is growing again in the jeonse market. Not only in Seoul and the greater capital area but also in key regional areas, expectations for rising jeonse prices are dominant. Since late last year, apartment jeonse prices have been climbing rapidly, fueling concern that jeonse instability could spread nationwide.
According to KB Real Estate on the 28th, the nationwide jeonse price outlook index for May was tallied at 120.1. That was up 2.6 points from the previous month. The jeonse price outlook index is calculated on a 0–200 scale; when it exceeds the baseline of 100, it means expectations for jeonse price increases over the next three months are dominant.
Seoul showed the strongest outlook for rising jeonse prices. Seoul's jeonse price outlook index hit a record high of 138.8. The index in Seoul has topped the 100 baseline for 16 straight months, and expectations for gains have grown further this month. Across the greater capital area, including Gyeonggi (128.6) and Incheon (120.8), expectations for higher jeonse prices were also dominant.
In the regions as well, expectations for rising jeonse prices are dominant. Ulsan's jeonse price outlook index was 122.7, the highest outside the capital area. It was followed by Busan (116.5), Sejong (116.2), South Jeolla (114.1), North Jeolla (113.7), South Gyeongsang (113.7) and Daegu (110.7), which also showed strong expectations for increases. Gwangju (98.1) and Gangwon (97.0) were the only places nationwide below the baseline.
Actual price gains are continuing. In May, nationwide apartment jeonse prices rose 0.41% from the previous month. The cumulative increase so far this year was 1.98%, and compared with the same month last year, they were up 3.30%.
The upward trend in Seoul's jeonse prices was particularly notable. Seoul apartment jeonse prices climbed 0.83% in a month and were up 6.77% from a year earlier. The increase was larger in the Gangbuk area (14 districts). Gangbuk jeonse prices rose 1.14% from the previous month and 7.29% from a year earlier, outpacing the Gangnam area. The Gangnam area (11 districts) rose 0.55% from the previous month and 6.30% from a year earlier.
Outside the capital area, the rise in Sejong City stood out. Sejong City's jeonse prices increased 0.43% from the previous month and jumped 10.81% from a year earlier.
Experts cite reduced supply as the reason behind rising regional jeonse prices. Areas that had accumulated unsold units due to past oversupply are now entering a phase of insufficient new supply.
Nam Hyeok-woo of the Woori Bank Real Estate Research Institute said, "Regions showing expectations for rising jeonse prices are generally places that have entered a phase of apartment supply shortage," and noted, "Rising living expense is being reflected in jeonse prices with a time lag."
By contrast, the jeonse market for single-family and row houses showed a relatively stable trend. Nationwide single-family home jeonse prices were unchanged from the previous month and edged up just 0.01% from the same month last year. Row house jeonse prices also rose only 0.05% from the previous month and 0.42% from a year earlier.
In the market, there is criticism that measures to expand supply are needed, given the possibility that jeonse market instability could persist. The government plans to stabilize the rental market by expanding non-apartment supply, but calls are growing to actively use private rentals as well.
A real estate expert said, "To stabilize the jeonse market, we need to expand private rental supply in addition to public rentals," and added, "Because private rentals can be supplied relatively quickly, they should be used as a policy tool."