As jeonse prices in the greater Seoul area keep rising, the burden is growing for tenants seeking new jeonse leases. New contracts reflect current market prices quickly, while renewals are influenced by the terms of existing contracts, widening the gap in jeonse deposits between new contracts and renewals even within the same complex and the same floor area. In Seoul apartments, even within the same complex, the jeonse deposit for new contracts was 80 million won higher than for renewals for 84 square meters of exclusive area.
On the 6th, ZIGBANG CO., a real estate platform, released an analysis of greater Seoul apartment jeonse transactions from January to June this year, including these findings. The analysis covered cases where both a new contract and a renewal occurred for the same complex and the same floor area. Jeonse deposits were compared using the median transaction price for the same complex and the same floor area, focusing on exclusive 59 square meters and 84 square meters. Monthly rent contracts were excluded.
Seoul showed the widest gap in jeonse deposits between new contracts and renewals among the greater Seoul areas. For 59 square meters of exclusive area, the difference in jeonse deposits between new contracts and renewals more than doubled from 35 million won in January to 77.5 million won in June. During the same period, the jeonse deposit for new contracts rose from 500 million won to 547.5 million won, while renewals stayed around 465 million won to 470 million won.
The gap for 84 square meters of exclusive area was even more pronounced. The difference in jeonse deposits between new contracts and renewals widened from 43.75 million won in January to 80 million won in June. While the jeonse deposit for new contracts rose from 656.25 million won to 700 million won over the same period, renewals were limited to around 612.5 million won to 620 million won, showing a clear difference in the pace of increase between new contracts and renewals.
Gyeonggi Province also showed a trend of rising burdens for new contracts. For 59 square meters of exclusive area, the difference in jeonse deposits between new contracts and renewals inched up from 20 million won in January to 22 million won in June. In contrast, for 84 square meters of exclusive area, the gap widened significantly from 10.5 million won to 51 million won over the same period. While the jeonse deposit for new contracts rose from 400 million won to 450 million won, renewals increased only to around 389.5 million won to 399 million won, further widening the gap with new contracts.
In Incheon, although new contracts traded at higher jeonse deposits than renewals, similar to Seoul and Gyeonggi, the expansion of the gap was relatively limited. As of June, the difference in jeonse deposits between new contracts and renewals was 9.5 million won for 59 square meters of exclusive area and 7.12 million won for 84 square meters, the smallest among the greater Seoul areas.
Actual transaction data also showed a gradual increase in the share of renewals. In Seoul, the share of new contracts fell from 52.6% in January to 45.0% in June, while the share of renewals rose from 47.4% to 55.0%, surpassing new contracts since April. Gyeonggi Province likewise saw the share of renewals rise from 38.6% to 45.4% over the same period.
New contracts reflect current market prices immediately, while renewals are influenced by the terms of existing contracts. When the right to request contract renewal applies, institutional limits on rent increases can act as a factor widening the gap in jeonse deposits between new contracts and renewals. Ordinary renewals without using the right to request contract renewal can relatively reflect current market prices, but because they are based on existing contracts, the deposit level can differ from that of new contracts.
With a recent shortage of jeonse listings and rising jeonse prices increasing the deposit burden for new contracts—and with incidental expenses such as moving costs and brokerage fees also considered—existing tenants appear to be opting for renewals more often. As the share of renewals has steadily risen, particularly in Seoul and Gyeonggi Province, the widening gap in jeonse deposits between new contracts and renewals and the preference for renewals are expected to continue for the time being while jeonse prices remain strong.