The rise in jeonse prices for apartments across the country is outpacing sales prices. Last month, the increase in nationwide apartment rental prices was the largest since October 2021, and in the second week of June, rental prices in Seoul and the metropolitan area continued to climb faster than sales prices.
According to a report by Real Estate 114 released on June 12, apartment rental prices nationwide rose by 0.11% compared to the previous week. In Seoul, prices increased by 0.15%, while the metropolitan area saw a 0.13% rise. The five major cities experienced a 0.08% increase, and other regions saw a 0.05% rise.
During the same period, the increase in sales prices was lower than that of rentals. Nationwide, apartment sales prices rose by 0.07%, with Seoul and the metropolitan area each seeing a 0.08% increase. The five major cities and other regions only recorded a 0.01% rise. In Seoul, the rental increase of 0.15% was nearly double the sales increase of 0.08%.
The upward trend in rental prices is widespread across regions. Out of 17 cities and provinces nationwide, 15 saw increases in rental prices, while one remained stable and one experienced a decline. Jeonnam recorded the highest increase at 0.20%, followed by Ulsan at 0.16%, Seoul at 0.15%, Busan at 0.13%, and Gyeonggi at 0.12%, all showing rises of over 0.10% within the week.
In contrast, fewer regions saw increases in sales prices. Among the 17 cities and provinces, 10 experienced price rises, one remained stable, and six saw declines. Gyeonggi and Daejeon each rose by 0.10%, followed by Seoul at 0.08%, Jeonbuk at 0.07%, and Chungbuk at 0.07%. While sales prices are also on the rise, the pressure in the rental market is more widespread and pronounced.
On a monthly basis, the pressure in the rental market is even more evident. Real Estate 114 reported that nationwide apartment rental prices rose by 0.64% in May, marking the largest monthly increase since 0.89% in October 2021. This surge is attributed to strong demand for rentals, particularly in Seoul and the metropolitan area.
Statistics released the previous day by the Korea Real Estate Agency also confirmed the strong rental trend. According to their report for the second week of June, the nationwide apartment rental price index increased by 0.12%. The metropolitan area saw a 0.22% rise, with Seoul at 0.32%, Incheon at 0.11%, and Gyeonggi at 0.19%.
The Korea Real Estate Agency analyzed that the high demand for rentals in Seoul continues, with an increase in inquiries from tenants. They noted that demand is accumulating in key areas with good living conditions, such as near subway stations and large complexes, leading to more rental contracts being signed. Significant increases were observed in districts with major complexes, such as Seongdong-gu at 0.64%, Dobong-gu at 0.55%, and Songpa-gu at 0.53%.
Sales prices also continued to rise. According to Real Estate 114, the nationwide apartment sales price increased by 0.07% in the second week of June, with Seoul and the metropolitan area each rising by 0.08%. The Korea Real Estate Agency also reported a 0.10% increase in the nationwide apartment sales price index, with Seoul at 0.27% and the metropolitan area at 0.20%. However, prices in other regions remained stable, highlighting the disparity between the metropolitan and non-metropolitan areas.
The concern is that rising rental prices directly impact the housing cost burden for actual residents. While increases in sales prices can be moderated by loan regulations, tax burdens, or a wait-and-see attitude in transactions, rising rental prices directly affect lease renewals and moving demands. Particularly in Seoul and the metropolitan area, if the perception of a shortage of available new apartments spreads, the demand for rentals may accumulate further.
There is also a possibility that rental price instability could spill over into the sales market. If rental prices rise, some tenants may turn to buying, and a narrowing gap between sales and rental prices could stimulate investment demand. However, with the potential for loan regulations and tax reforms, it remains to be seen whether the rising rental trend will lead to an overall overheating of the sales market.
Experts identify the speed of supply as a key variable for stabilizing the rental market. Real Estate 114 noted that as apartment sales and rental prices rise in Seoul and the metropolitan area, the government has announced plans for tax reforms and additional supply expansion. They believe that supply issues will emerge as a critical factor in the real estate market. The speed of construction for existing metropolitan area supply plans and the addition of impactful land or redevelopment projects to supply plans will be crucial.
A real estate industry official stated, "Recently, the market has shown that rising rental prices are a more sensitive variable than sales prices. If rental instability in Seoul and the metropolitan area continues, it could lead to increased housing cost burdens for actual residents and also become a factor of instability in the sales market."
* This article has been translated by AI.
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