Last month, the consumer price index for monthly rent increased by 1.5% compared to a year earlier, marking the largest rise in nearly 13 years. The price of jeonse also rose by 1.4%, as new jeonse loan rates from banks climbed to 4.57% annually in September, increasing the financial burden on tenants.
According to the National Data Agency's National Statistical Portal (KOSIS), the nationwide monthly rent consumer price index rose by 1.5% last month compared to the same month last year, the highest increase since December 2013 (1.5%). The jeonse price increase rate was 1.4%, the highest since February 2023 (1.6%).
The combined price of jeonse and monthly rent rose by 1.4% from a year ago, the largest increase in three years and ten months since December 2022. The increase rate for jeonse and monthly rent has risen consecutively over four months, from 1.0% in June to 1.1% in July, 1.2% in August, 1.3% in September, and 1.4% in October.
The consumer price index for jeonse and monthly rent reflects both existing and new contracts. Even if prices for new contracts rise, existing tenants often see their rent change only upon renewing their contracts. As a result, market price movements are reflected in the price index with a delay.
Regionally, Ulsan recorded the highest increase in jeonse and monthly rent prices at 2.4%, followed by Seoul at 2.1% and Sejong at 1.6%. These three areas exceeded the national average. Ulsan has shown the highest increase for four consecutive months since recording 2.0% in July. Seoul rose from 1.7% in July to 2.0% in September, maintaining a 2% rate for two consecutive months. Sejong, which remained in the 0% range until June, increased to 1.6% in October.
The interest burden for tenants taking out new loans to secure deposits has also increased. According to the Bank of Korea's monetary and financial statistics, the interest rate for new jeonse loans from deposit banks rose from 3.70% annually in May last year to 4.57% in September this year, an increase of 0.87 percentage points.
Applying the average rates from these two points to a loan principal of 100 million won, the monthly interest rises from approximately 308,300 won to 380,800 won. Assuming the principal remains unchanged, this results in a simple calculation of an additional 72,500 won per month, or 870,000 won annually.
The average deposit required for jeonse households has increased by over 56 million won in six years. An analysis of the microdata from the National Data Agency's Household Finance and Welfare Survey shows that the average deposit for jeonse households rose from 161.62 million won in 2019 to 217.97 million won last year, an increase of 56.35 million won (34.9%). This trend has continued annually, surpassing 200 million won in 2023.
During the same period, the balance of collateral and credit loans used to secure deposits increased from an average of 30.33 million won per household to 46.39 million won, a rise of 53.0%, which is 18.1 percentage points higher than the deposit increase rate. The ratio of average financial debt for deposit purposes to the average deposit also increased from 18.8% to 21.3% during this period.
In the past two years, the trends for deposits and financial debt have diverged. While the average deposit has continued to rise, the average financial debt per household for deposit purposes decreased by 2.1% in 2024 and by 1.0% last year.
* This article has been translated by AI.
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