As the national discussion on real estate approaches, tax, loan, and supply regulations have taken center stage, while measures for stabilizing rental costs for tenants have been relatively overlooked. There are growing calls for rental stability solutions to be included in the national discussion led by President Lee Jae-myung on July 23, especially since the rental system itself has not been highlighted as a separate issue in previous discussions.
According to the real estate industry on July 21, the government plans to comprehensively discuss key opinions in the areas of housing supply, housing finance, and real estate taxation during the national discussion on real estate hosted by President Lee Jae-myung on July 23. Prior to this, sector-specific discussions were held by the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, and the Ministry of Economy and Finance from July 14 to 16.
While the issue of rental markets was included in the supply sector discussions, the focus was primarily on the entities supplying rental housing and the proportions of public rental and public sale housing. The rental system itself, including rental prices, contract renewals, and security deposit return safeguards, was not addressed as a distinct issue.
The concern is that the outcomes of discussions on taxation, finance, and supply will all impact the rental market. An increase in property taxes raises fears of rental price hikes, while restrictions on jeonse loans increase the burden on tenants to secure deposits, potentially pressuring them to switch to monthly rent or half-monthly rent. As redevelopment projects begin, demand for jeonse in surrounding areas is also expected to rise. This creates a structure where the ultimate burden of policy changes may fall on the rental market.
The rental market in Seoul is already showing signs of instability. As of June, the number of jeonse listings for apartments in Seoul was 18,574, a 27.26% decrease from 25,535 during the same period last year. The proportion of renewal contracts in Seoul was also recorded at 55.4% last month, indicating a trend where existing tenants are remaining in place as new jeonse listings decline.
The shift towards monthly rent is also becoming more pronounced. From January to May this year, the proportion of monthly rent transactions among rental agreements was 68.6%, an increase of 7.6 percentage points compared to the previous year. The pressures from jeonse deposit burdens, concerns over deposit returns, and jeonse loan burdens are contributing to the increased pressure to switch to monthly rent or half-monthly rent.
Price increases continue as well. According to the Korea Real Estate Agency, as of the second week of July, the sale price of apartments in Seoul rose by 0.30%, while jeonse prices increased by 0.28%. The cumulative increase in apartment prices in Seoul this year stands at 5.74% for sales and 5.72% for jeonse, with the gap narrowing to just 0.02 percentage points. Compared to the same period last year, the pressure on jeonse prices has significantly increased.
Kwon Dae-jung, a professor of economics and real estate at Hansung University, stated, “As the number of jeonse listings decreases and jeonse prices surge, the burden of housing costs on tenants is growing, leading them to shift to the sales market. This cycle is repeating amid concerns over future supply shortages and a spreading 'pre-purchase' mentality.”
There is also insufficient supply of non-apartment jeonse options to replace apartment jeonse. Due to the impact of jeonse fraud, there is a strong preference for monthly rent in the villa, multi-family, and urban-type housing markets, and the supply of newly built non-apartment units is also constrained. It has been suggested that the rationalization of financial and tax regulations for jeonse loan systems and the supply of non-apartment new builds should be considered together to stabilize the rental market.
A real estate industry insider remarked, “In a situation where jeonse listings are decreasing and the proportion of monthly rent is increasing, discussing taxes and loans separately could overlook the burden on tenants. We need to discuss property taxes, jeonse loans, and relocation costs from redevelopment projects together to establish rental stability measures.”
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.