Seoul’s apartment lease supply-demand index, a gauge of the balance between demand and supply for jeonse deposits, has climbed to its highest level since June 2021, signaling demand is outpacing available listings.
According to the Korea Real Estate Board on the 26th, the index for the third week of April (as of April 20) came to 108.4, up 3.2 points from the previous week’s 105.2. The increase was larger than the prior week’s 0.7-point rise.
It was the highest reading in about five years, since 110.6 in the fourth week of June 2021 (as of June 28). Readings above 100 indicate more tenants seeking jeonse than landlords offering it; the closer to 200, the stronger the demand relative to supply.
The index rose as high as 109.1 in September 2021, a period widely described as a jeonse crunch. After the 2020 enactment of two rental laws — the right to request a contract renewal and a cap on rent increases — jeonse listings in the Seoul metropolitan area tightened, pushing prices higher. The annual apartment jeonse increase rate in the metropolitan area reached 10.65%.
In Seoul, the index moved above 100 starting in the third week of May last year (100.2) and has continued to rise since March as the spring moving season began.
By region, the index was highest in the northeast area (Seongdong, Gwangjin, Dongdaemun, Jungnang, Seongbuk, Gangbuk, Dobong and Nowon) at 111.3. It was followed by the northwest (Eunpyeong, Seodaemun and Mapo) at 108.6, the southwest (Yangcheon, Gangseo, Guro, Geumcheon, Yeongdeungpo, Dongjak and Gwanak) at 108.2, the southeast (Seocho, Gangnam, Songpa and Gangdong) at 105.3, and the central area (Jongno, Jung and Yongsan) at 105.3.
The rise is being attributed to a mix of factors, including tighter rules affecting rental businesses and lending, and fewer listings from owners of multiple homes. The government’s Oct. 15 measures designated all of Seoul and 12 areas in Gyeonggi Province as land transaction permit zones, requiring owner occupancy and blocking so-called gap investment — buying homes with a jeonse tenant in place — which contributed to the listing squeeze. Tax rules aimed at encouraging multi-home owners to sell also had an impact as some existing rental homes shifted to owner occupancy.
Lee Chang-moo, a professor of urban engineering at Hanyang University, said rental supply needs to keep pace with newly formed households, but “the path for rental businesses or multi-home owners to expand supply is blocked, and if they sell, the homes shift to owner-occupied.” He added, “It’s not just that one rental unit disappears — the chain of housing moves gets clogged.”
The shift from jeonse to monthly rent is also accelerating. According to housing statistics from the Ministry of Land, Infrastructure and Transport, monthly rent accounted for 68.3% of the national rental market in February, the highest in five years. In Seoul, the share was 70.3%, above the national average and a key driver of the rise.
With jeonse supply tight, prices are also rising quickly. Seoul apartment jeonse prices rose 0.22% in the third week of April from the previous week, the biggest weekly increase since December 2019. The average jeonse price, as of last month, was 600.149 million won, topping 600 million won for the first time in three years and five months.
Jin Chang-ha, a professor of economics at Hanyang University, said in the Seoul metropolitan area, where homeownership is relatively low, tighter lending rules that make leveraged investment harder can lead investor-held homes to shift into the sales market or to arrangements with smaller deposits and higher monthly payments. “As a result, existing jeonse supply will convert to monthly rent, and existing jeonse tenants will shift into end-user demand in outlying areas — a major change,” he said.
* This article has been translated by AI.
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