An inversion has appeared in Seoul's apartment lease market, with monthly rent transactions overtaking jeonse. In the second quarter of last year alone, jeonse transactions exceeded monthly rent by more than 8,000, but the gap narrowed each quarter and flipped to a monthly rent advantage in the second quarter of this year.
As demand for monthly rent grows, monthly rent prices are also rising. In Mia-dong, Gangbuk District, where there had been many mid- to low-priced monthly rentals, there were contracts for "national standard" apartments with monthly rent exceeding 3 million won. Monthly rent contracts of 3 million won or more a month, once the preserve of high-end dwellings in Gangnam or large floor plans, are spreading to Gangbuk.
Summing the Ministry of Land, Infrastructure and Transport's actual transaction reports by quarter, released on the Seoul Real Estate Information Plaza on the 3rd, showed that in the second quarter of this year, Seoul apartment monthly rent transactions totaled 27,852, 1,828 more than the 26,024 jeonse transactions.
In the second quarter of last year, jeonse transactions totaled 38,482, 8,468 more than the 30,014 monthly rent transactions. The jeonse advantage shrank by the quarter to 7,320 in the third quarter of last year, 4,279 in the fourth quarter, and 1,548 in the first quarter of this year. Then, in the second quarter of this year, monthly rent exceeded jeonse by 1,828, reshaping transaction patterns into a market with more monthly rent than jeonse in a year.
Due to the surge in monthly rent in the second quarter, monthly rent outnumbered jeonse even for the first half of this year (January to June) as a whole. In the first half, jeonse transactions totaled 59,149, while monthly rent transactions totaled 59,429, with monthly rent exceeding jeonse by 280.
The decline in jeonse transactions was also steeper than for monthly rent. Seoul apartment jeonse transactions fell 35.3% in five months, from 12,374 in January to 8,002 in June. Over the same period, monthly rent transactions decreased 15.1%, from 11,453 to 9,718. In January, jeonse exceeded monthly rent by 921, but in June, monthly rent surpassed jeonse by 1,716.
With a market tilt toward monthly rent, high-priced monthly rent contracts are appearing in the northern districts as well. At Hanwha Forena Mia in Mia-dong, Gangbuk District, an exclusive 84 square meters unit saw a contract with a 50 million won deposit and 3.1 million won in monthly rent. Monthly rent in the 3 million won range, which had mainly appeared in high-end dwellings in Gangnam or large sizes, has spread to an exclusive 84 square meters in Gangbuk. At Byucksan Apartment in Sanggye-dong, Nowon District, an exclusive 46 square meters unit was leased with a 30 million won deposit and 1 million won in monthly rent. It was the first transaction at that complex for the same size to record 1 million won in monthly rent.
In the jeonse market, renewals of existing contracts are increasing and prices are rising. In June, renewals accounted for 53.8% of Seoul apartment jeonse transactions, up 12.6 percentage points from 41.2% a year earlier.
At individual complexes, record-high contracts are continuing. An exclusive 45.9 square meters unit at Sanggye Jugong Complex 13 in Sanggye-dong, Nowon District, signed a jeonse contract at 260 million won, surpassing the previous high in the 210 million won range. An exclusive 59 square meters unit at Raemian Gireum Centerpiece in Gireum-dong, Seongbuk District, also signed a new contract at 750 million won in June.
Meanwhile, many expect the rise in jeonse and monthly rent prices to continue in the second half. A survey by Real Estate R114 of 1,602 people nationwide found that 61.86% expected jeonse prices to rise, while 65.04% expected monthly rent to rise. According to the Korea Real Estate Board (REB), in May, Seoul's apartment jeonse actual transaction price index rose 1.04% from the previous month and 10.88% from a year earlier. In the northeastern area combining Gangbuk, Dobong, Nowon, Seongbuk, Jungnang, Dongdaemun, Seongdong, and Gwangjin districts, the index rose 2.25% from the previous month and 12.11% from a year earlier, outpacing the Seoul average.