Rental prices for small apartments in northern Seoul have surged to their highest level in over 12 years, intensifying instability in the rental market. The increase is attributed to soaring property prices that have made homeownership more difficult, coupled with a sharp decline in new rental listings, leading to heightened demand from newlywed couples and young professionals seeking smaller apartments.
According to statistics from the Korea Real Estate Agency, rental prices for apartments measuring 60 to 85 square meters in the northeastern region (comprising Gangbuk, Dobong, Nowon, Seongbuk, Jungnang, Dongdaemun, Seongdong, and Gwangjin districts) rose by 0.47% in the second week of June (as of June 8). This marks the highest weekly increase since the third week of October 2013, when a rental crisis was underway, which saw a 0.67% rise. Similarly, rental prices for the same size apartments in the 14 districts north of the Han River also increased by 0.40% during the same period, reaching a 12-and-a-half-year high.
In the northeastern region, rental prices for older, larger small apartments are rising rapidly. Data from the Ministry of Land, Infrastructure and Transport shows that a 59.38 square meter unit in the Samsung Raemian Tribera Complex 2 in Mia-dong, Gangbuk District, was leased for a record 600 million won on June 12, an increase of 70 million won from the previous high. Additionally, a 59.9 square meter unit in the Gil-eum New Town 8 Complex (Raemian) in Seongbuk District was leased for 680 million won on June 6, surpassing the previous record by 30 million won.
The rapid increase in rental prices for small apartments in the northeastern region is causing fluctuations in the overall rental market across Seoul. The average rental price for apartments measuring 60 to 85 square meters in Seoul rose by 0.36%, the highest increase since the fourth week of March 2015. This reflects a broader trend of price instability due to chronic rental shortages affecting the entire city.
A representative from a real estate agency in Gil-eum-dong, Seongbuk District, stated, "New and nearly new rental listings in preferred areas are quickly being depleted, and few new listings are becoming available. As a result, relatively affordable older apartments in the northeastern region are attracting newlywed couples and other first-time renters, driving up prices further."
Analysts attribute this situation to a significant decline in the supply of new small apartments. According to Real Estate 114, only 7,975 small apartments measuring 60 square meters or less have been completed or are set to be completed in Seoul this year, a 52.5% decrease from last year's total of 16,780 units. The supply of small apartments is expected to drop further to around 4,700 units next year, exacerbating the short-term supply gap.
Conversely, demand for small apartments has surged due to rising property prices and demographic changes. Statistics from Realhouse, a company specializing in subscription evaluations, indicate that the average competition ratio for first-round applications for small apartments under 59 square meters in Seoul from January to May was 62 to 1, significantly higher than the 46.9 to 1 ratio for larger units.
Lee Eun-hyung, a researcher at the Korea Construction Policy Institute, explained, "The recent high rental increase for small apartments is the result of increased demand and decreased supply. The ongoing regulations on multiple homeowners have reduced rental supply, and those with limited financial resources are naturally gravitating towards smaller units."
He added, "Considering accessibility to major employment hubs like Gwanghwamun, Jongno, and Gangnam, the preference for the northeastern region remains higher than for the northwestern region, leading to concentrated rental demand and subsequent price instability."
* This article has been translated by AI.
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