Monthly rent surpasses jeonse in Seoul apartment leasing market, accounting for 54% of deals

Monthly-rent transactions have again surpassed the 50 percent threshold in Seoul's apartment leasing market, pulling well ahead of jeonse deals. With jeonse prices continuing to rise and the share of lease renewals outpacing new contracts, tenants face growing housing costs and diminishing mobility.

The Seoul Metropolitan Government released the figures Wednesday, drawing on the Korea Real Estate Board's apartment actual transaction price index and the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system. The data cover actual apartment transaction price trends for May and trading volume statistics for June.

As of Wednesday, June jeonse transactions in Seoul totaled 7,477 — down 12.5 percent from the previous month. Monthly-rent transactions, meanwhile, rose 3.3 percent month on month to 8,819.

As a result, monthly-rent deals accounted for 54.1 percent of Seoul apartment lease transactions in June, while jeonse's share fell to 45.9 percent. The market has broken away from the roughly even split between the two lease types that had held since December last year, with monthly-rent arrangements now clearly dominant.

The share of renewal contracts within jeonse deals also climbed. Renewals accounted for 53.8 percent of jeonse transactions in June, exceeding both the previous month's 52.5 percent and the 41.2 percent recorded in the same month last year. Among renewals, the proportion in which tenants exercised their right to demand contract renewal rose to 55.0 percent from 51.3 percent the previous month, though it remained below the 57.7 percent seen a year earlier.

Actual jeonse transaction prices continued to rise. Seoul apartment jeonse prices in May climbed 1.04 percent from the previous month and were up 10.88 percent from a year earlier.

By district, the northeastern zone led gains with a 2.25 percent month-on-month increase. The northwestern zone rose 1.20 percent and the southwestern zone 0.85 percent. The southeastern zone edged up just 0.03 percent, while the city center zone fell 0.39 percent.

By size, actual jeonse prices rose across all categories except large units. Small apartments with an exclusive use area of more than 40 square meters and up to 60 square meters posted the steepest gain at 1.43 percent, followed by medium-small units at 1.10 percent, micro units at 0.76 percent and medium-large units at 0.32 percent. Large units fell 0.67 percent.

In the sales market, the pace of price gains accelerated sharply from the previous month. According to the Korea Real Estate Board, Seoul apartment actual transaction prices in May rose 1.33 percent month on month, well above the 0.20 percent gain recorded in April. Year on year, prices were up 13.47 percent.

All five residential zones in Seoul posted month-on-month gains in actual sales prices. The city center zone led with a 2.52 percent increase, followed by the southwestern zone at 1.53 percent, the northeastern zone at 1.51 percent, the northwestern zone at 1.27 percent and the southeastern zone at 0.58 percent.

Prices rose across all unit sizes as well. Small apartments posted the largest gain at 1.79 percent, while medium-large units with an exclusive use area of more than 85 square meters and up to 135 square meters were close behind at 1.76 percent.

Transaction volume fell in June. As of Wednesday, 4,603 Seoul apartment sales were recorded for June — down 48.0 percent from the previous month. In April, ahead of the resumption of the heavier capital gains tax on multi-home owners, transactions had surged 56.8 percent month on month to 8,856. However, because the reporting deadline for June contracts runs through the end of this month, the final tally could rise further.

By price bracket, the share of transactions at or below 1.5 billion won ($1.01 million) expanded again. Such deals made up 77.9 percent of Seoul apartment sales in June, up 5.0 percentage points from 72.9 percent the previous month.

The Seoul Metropolitan Government said the share of sub-1.5-billion-won transactions had declined in April and May as high-priced home sales increased ahead of the expiration of the capital gains tax surcharge exemption for multi-home owners. In June, however, the concentration of high-end transactions eased and end-user demand for mid-to-lower-priced homes picked up amid lending regulations.

By district, Nowon-gu recorded the highest transaction volume at 614 deals, followed by Gangseo-gu, Seongbuk-gu, Guro-gu, Dobong-gu and Eunpyeong-gu. In all of these districts, transactions at or below 1.5 billion won accounted for well over 90 percent of deals.