Seoul apartment jeonse prices are rising sharply. In Gangnam, seen as a barometer for Seoul home prices, jeonse for the so-called "national standard size" of 84 square meters has surged to the mid-2 billion won range. In preferred neighborhoods along the Han River, including Mapo, Yongsan and Seongdong districts, jeonse has climbed to around 1.5 billion won, with a string of record-high transactions.
According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport on the 16th, an 84-square-meter unit at ACRO River Park in Banpo-dong, Seocho District, Seoul signed a jeonse contract for a 2.4 billion won deposit on May 12. The same size in this complex had a new jeonse contract at 1.7 billion won on Mar. 20, meaning it rose 700 million won in less than two months.
Jeonse prices vary widely depending on whether the contract is new or a renewal. Still, given that the same size in this complex mostly saw transactions in the 1.5 billion to 1.8 billion won range last year, there is a view that the recent uptrend is clear.
In the three Gangnam districts, jeonse transactions with deposits exceeding 2 billion won are also increasing rapidly. According to the Ministry of Land, Infrastructure and Transport (MOLIT), from January this year through the day before, there were 35 transactions with deposits of 2 billion won or more among jeonse contracts for apartments over 60 square meters and up to 85 square meters in Gangnam, Seocho and Songpa districts. That is nearly double the 18 during the same period last year.
An 84-square-meter unit at Raemian One Bailey in Banpo-dong signed a jeonse contract for 2.2 billion won on the 5th. An 84-square-meter unit at ACRO Riverview in Jamwon-dong also took in a tenant at 2.1 billion won on Apr. 22. High-priced jeonse transactions are spreading, centered on major new and recently built complexes in the Banpo and Jamwon areas.
Jeonse price gains are also pronounced in the Mapo, Yongsan and Seongdong area, grouped as the Han River belt. An 84-square-meter unit at Gongdeok SK Leaders' View in Gongdeok-dong, Mapo District, set a record price with a jeonse contract at 1.33 billion won on the 13th. Compared with the same size that transacted at 966 million won in May last year, it has risen by more than 360 million won in just over a year.
An 84-square-meter unit at Yongsan Hoban Summit Edition in Yongsan District signed a jeonse contract at 1.5 billion won in April. An 84-square-meter unit at Seoul Forest I'Park Riverforet Phase 1 in Seongsu-dong, Seongdong District, also transacted at 1.4 billion won the same month. Analysts say the jeonse uptrend is spreading beyond Gangnam to key Han River neighborhoods with strong job access and living infrastructure.
The biggest cause of the jeonse price surge is cited as reduced supply. According to real estate platform Asil, as of the day before, Seoul apartment jeonse listings numbered 18,935, down 24.9% from the same day last year. With tax burdens and regulations prompting landlords to sell their dwellings or switch to owner-occupation, jeonse listings are decreasing. Moves to convert existing jeonse to half-jeonse or monthly rent are also spreading.
By contrast, jeonse demand is not easing easily. Lease demand remains steady in preferred locations such as good school districts, strong job access, large complexes and stationside areas. Analysts say demand unable to enter the sales market due to lending regulations is staying in the jeonse market, adding upward pressure on prices.
Song Seung-hyeon, head of Urban and Economy, said, "The biggest reason for the rise in jeonse prices is an imbalance between supply and demand," and noted, "While supply has decreased, demand blocked from entering the sales market by lending regulations has accumulated in the jeonse market, pushing up prices."
Statistically, the uptrend in Seoul's jeonse market is also clear. According to the May nationwide housing price trend survey by the Korea Real Estate Board (REB), the comprehensive average jeonse price index for Seoul dwellings rose 0.91% from the previous month. This is the largest increase in 12 years and 7 months since a 1.04% rise in Oct. 2013. The board explained, "As lease demand continues steadily, inquiries for leases have increased, centered on complexes with favorable living conditions such as large complexes and stationside areas."