The rise in Seoul's apartment jeonse market is rapidly spreading to the Gangbuk and outlying areas. With increasing demand for housing purchases being postponed due to loan regulations and rising home prices, a shortage of jeonse listings has led to a surge in rental demand in relatively lower-priced regions.
In particular, both sales and jeonse prices have significantly increased in the Gangbuk area, including Gangbuk-gu, Jungnang-gu, and Seongbuk-gu. Analysts suggest that while prices continue to rise in the sales market, there is also a backlog of demand from those wishing to remain in the jeonse market.
According to a weekly apartment market trend report released by KB Real Estate on July 25, the jeonse prices for Seoul apartments rose by 0.38% in the third week of July, maintaining the same growth rate as the previous week.
By district, Gangbuk-gu saw the highest increase in jeonse prices at 1.15% over the week, followed by Dongjak-gu at 0.82%, Jungnang-gu at 0.76%, Gwangjin-gu at 0.73%, and Seongbuk-gu at 0.65%.
This week's rise in jeonse prices prominently features districts in the Gangbuk area, indicating that price pressures are now being felt in regions that previously had lower rental costs.
A similar trend was observed in the sales market. During the same period, the sales prices of Seoul apartments increased by 0.34%, matching the previous week's growth. Jungnang-gu recorded the highest increase at 1.08%, followed by Nowon-gu at 0.66% and Seongbuk-gu at 0.54%.
Notably, there is considerable overlap between the areas experiencing increases in both sales and jeonse prices. In districts like Jungnang-gu and Seongbuk-gu, both sales and rental prices are showing strong upward trends. This suggests that the price increases that began in central Seoul are now extending to relatively affordable areas, boosting both the sales and rental markets.
However, despite the rising sales prices, the sentiment among potential homebuyers has softened. The buyer sentiment index for Seoul dropped from 89.2 the previous week to 84.2 this week, a decrease of 5.0 points. A score above 100 indicates more buyers than sellers, while a score below 100 indicates the opposite.
Regionally, the buyer sentiment index for the 14 districts in Gangbuk fell by 7.4 points in just one week, more than double the 2.9-point drop in the 11 districts of Gangnam. While sales prices are rising rapidly in the Gangbuk area, the actual demand for purchases has slightly decreased.
Meanwhile, the rise in jeonse prices in Seoul is also affecting adjacent Gyeonggi Province. According to KB Real Estate, the jeonse price in Hwaseong's Dongtan area increased by 0.70% this week, while Guri saw a rise of 0.64%, Gwangmyeong 0.52%, and Hanam 0.44%.
These areas share the commonality of relatively good accessibility to Seoul or have recently experienced notable increases in sales prices. It appears that the jeonse demand displaced from Seoul, along with the waiting demand for purchases in these regions, is driving up rental prices.
In Dongtan, despite a wait-and-see attitude in the sales market following its designation as a regulated area, previous upward trends in price indicators are still being reflected with a lag. Even if sales transactions decline, existing demand for housing remains, meaning that demand waiting to purchase may continue to support the jeonse market, potentially keeping prices strong.
Gwangmyeong, Guri, and Hanam are also considered alternative residential areas adjacent to Seoul. Historically, when jeonse prices in Seoul rise, demand has shifted to these relatively lower-priced areas. However, recently, the jeonse prices in Gyeonggi Province have also increased, diminishing the cost-saving effect.
Looking ahead, the demand for jeonse during the fall moving season and the volume of new housing units will be key variables. Typically, the second half of the year sees an increase in jeonse demand due to school districts and job relocations. In areas where new apartment supply is insufficient, seasonal demand increases are likely to directly lead to rising jeonse prices.
The duration of the wait-and-see attitude in the sales market is also crucial. If loan regulations persist and the burden of home prices does not ease, demand waiting to purchase may remain in the jeonse market for an extended period. The decrease in sales transactions does not necessarily lead to a reduction in jeonse demand; rather, it may accumulate rental demand.
If jeonse prices continue to rise, it could also inadvertently stimulate the sales market. As the gap between jeonse and sales prices narrows, some tenants may convert to buyers, and landlords may find themselves with greater investment capacity using jeonse deposits.
A real estate industry insider stated, “The recent rise in jeonse prices is not just a localized phenomenon in certain areas of Gangnam but is spreading to Gangbuk and outlying areas of Seoul, as well as adjacent regions in Gyeonggi. As immediate housing needs concentrate in the jeonse market, it could exacerbate instability in the rental market unless the supply of new housing units and jeonse listings becomes visible.”
* This article has been translated by AI.
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