Seoul's rental crisis for apartments is spilling over into the non-apartment rental market, including villas and multi-family homes. Following a series of rental scams, demand for villas has rebounded, leading to a 7.4% increase in rental transactions for multi-family housing in Seoul during the first four months of this year compared to the same period last year. As transaction volumes rise, rental prices are also climbing.
As of June 3, an analysis of rental transaction data reported to the Ministry of Land, Infrastructure and Transport shows that there were 49,679 transactions for multi-family housing from January to April this year, up 3,435 transactions or 7.4% from 46,244 during the same period last year. This marks a 13.4% increase compared to the previous four months, which recorded 43,807 transactions from September to December last year.
There are still pending transactions from April that have not yet been reflected due to delays in reporting final payments or contract dates, suggesting that the final transaction volume may increase further.
Market analysts attribute the rising demand for multi-family housing to increasing rental prices and a shortage of available apartments in Seoul. As barriers to entering the apartment rental market have risen, mid- to low-income renters are shifting to villas and multi-family homes, which are perceived as more affordable. Although there remains a reluctance to rent non-apartment properties due to concerns over rental scams, the prolonged apartment rental crisis has led tenants to explore options in the non-apartment market. Notably, properties that qualify for rental insurance or are located near transit hubs are seeing quicker inquiries, according to industry insiders.
The increase in demand for non-apartment rentals is also reflected in the sales market. According to Real Estate Planet, the transaction volume for multi-family housing in Seoul reached 10,201 in the first quarter of this year, a 48.6% increase from 6,864 during the same period last year, marking the highest level since the second quarter of 2022. The rental transaction volume for multi-family housing also rose to 37,764 in the first quarter, a 14.2% increase from the previous quarter, with monthly rentals accounting for 63.5% of the total.
As demand grows, prices are also on the rise. According to the Korea Real Estate Agency, the average rent for multi-family homes in Seoul increased by 0.44% in April compared to the previous month, marking the highest rate of increase in 12 years and seven months since September 2013. The cumulative increase from January to April this year stands at 1.34%, the highest for the same period since 2011.
Monthly rents are also surging. The cumulative increase in monthly rent for multi-family homes in Seoul from January to April is 1.60%, surpassing the increase in lease prices. This is the highest level recorded since July 2015. The average security deposit for multi-family housing during this period was 240.98 million won, up 7.75 million won from 233.23 million won last year. The average monthly rent also rose from 548,000 won last year to 562,000 won this year.
More tenants are opting to stay in their existing homes. The proportion of renewal contracts for multi-family housing from January to April this year was 27.25%, up from 26.73% during the same period last year. Notably, the share of renewal contracts utilizing the right to request renewal increased from 24.8% last year to 32.0% this year, reflecting a growing trend of tenants preferring to limit rent increases and remain in their current homes rather than seeking new properties.
Industry experts view this trend as a response to the apartment rental crisis rather than a full recovery of the non-apartment market. Concerns about the risk of deposit returns following rental scams remain prevalent, leading to significant variations in preferences based on factors such as the availability of rental insurance, landlord creditworthiness, and the condition of the property.
A real estate agent in the Hwajeong-dong area of Gangseo-gu noted, "As the supply of mid-priced apartments decreases, more tenants are looking into multi-family homes. Although there is still caution due to fears of rental scams, properties that meet price conditions and qualify for rental insurance are moving quickly."
* This article has been translated by AI.
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