Seoul studio rents fall on average, but ultra-high monthly rents keep climbing

Polarization is deepening in Seoul's monthly rent market as the broader shift away from jeonse — a lump-sum deposit lease — accelerates. Average monthly rents for studios in rowhouses and multi-family buildings have been falling, yet monthly rents of 10 million won or more keep rising.

Real estate information platform Dabang analyzed June contracts for Seoul rowhouse and multi-family studios — those with an exclusive use area of 33 square meters or less — based on actual transaction price data from the Ministry of Land, Infrastructure and Transport. The average monthly rent came in at 640,000 won, down 60,000 won, or 8.2 percent, from May — the steepest month-on-month decline recorded this year.

By district, Gangnam-gu posted the highest average monthly rent at 1.02 million won, or 158 percent of the Seoul average. That figure jumped 5.1 percent in a single month, pushing Gangnam-gu back above the 1 million won mark for the first time since March. The district has ranked first among all Seoul wards for average monthly rent for 13 consecutive months since June last year.

Seongdong-gu came in second at 860,000 won, or 134 percent of the city average, followed by Yongsan-gu at 840,000 won (130 percent), Dongdaemun-gu at 750,000 won (116 percent) and Seocho-gu at 740,000 won (116 percent). Gangbuk-gu was the cheapest district at 390,000 won.

Even as rents for rowhouse and multi-family studios have eased, the apartment market is telling a different story, with ultra-high monthly rents surging.

In the first half of this year, 134 new Seoul apartment lease contracts carried monthly rents of 10 million won or more — a 47.3 percent jump from 91 contracts in the same period a year earlier. By district, Yongsan-gu led with 48 such contracts, followed by Seocho-gu with 27, Gangnam-gu with 20 and Seongdong-gu with 17.

At Nainwon Hannam in Hannam-dong, Yongsan-gu, a 244-square-meter unit on the second floor was leased in March with a deposit of 300 million won and a monthly rent of 40 million won. A 213-square-meter unit on the 13th floor of Poseidon Hangang in Gwangjang-dong, Gwangjin-gu was leased the same month for a deposit of 500 million won and a monthly rent of 27 million won.

Leases at 2 million won or more per month totaled 7,344 contracts, accounting for 21.2 percent of all apartment monthly rent deals in the first half. That share is up 3.3 percentage points from 6,177 contracts, or 17.9 percent, in the same period last year.

Analysts say the surge in high-end monthly rents reflects a further migration of jeonse demand into the monthly rent market, driven by a shrinking supply of new move-ins and a shortage of rental listings. According to the Ministry of Land, Infrastructure and Transport's June housing statistics, monthly rent transactions accounted for 52 percent of all apartment lease deals in the first half of this year, up 8.1 percentage points from a year earlier.

Monthly rent prices are also climbing. According to the Korea Real Estate Board, the average monthly rent for a Seoul apartment last month was 1.592 million won, up 170,000 won, or 12.0 percent, from 1.422 million won in June last year. The figure has risen steadily throughout the year: 1.504 million won in January, 1.515 million won in February, 1.528 million won in March, 1.545 million won in April and 1.566 million won in May.

"With the government trying to reduce jeonse while new supply remains scarce, it would actually be strange if monthly rents were not rising," said Kim In-man, director of Kim In-man Real Estate Economic Research Institute. "The fact that large foreign capital firms like Morgan Stanley are considering entering Korea's rental market reflects their expectation of strong growth potential in the monthly rent sector here."