The supply shortage in the rental market for apartments in the metropolitan area is intensifying. The rental supply index for North Seoul has surpassed 188, indicating a near depletion of available units. As demand spreads to Gyeonggi Province and Incheon, signs of a rental crisis are becoming evident across the metropolitan area.
North Seoul's Index Approaches 190... Metropolitan Area Sees 7-Point Rise in 10 Weeks
According to a weekly report on apartment price trends released by KB Real Estate on June 1, the rental supply index for the metropolitan area reached 179.3. This marks a 6.7-point increase over the past ten weeks, compared to 172.6 in the third week of March. Notably, Seoul's index has risen to 182.0, while North Seoul's index has soared to 188.4, nearing the critical level of 200, which indicates complete supply exhaustion. North Seoul's index is now over 12 points higher than that of South Seoul, which stands at 176.2.
The rental supply index is calculated on a scale from 0 to 200, with values above 100 indicating a higher proportion of responses indicating supply shortages. As the index approaches 200, it signifies extreme difficulty in finding rental properties. The current index of 188.4 for North Seoul suggests that rental listings are nearly depleted. Analysts are increasingly attributing this situation to a structural supply shortage rather than a temporary phenomenon. Typically, when the index exceeds 190, the market tends to enter a phase of rapid rental price increases.
Rental Rate Increase of 0.28%... Outpacing Sales Growth
The actual imbalance in supply and demand is reflected in rental prices. KB Real Estate reported a rental rate increase of 0.28% in Seoul during the same period, significantly surpassing the sales rate increase of 0.193%. Among districts, Dobong-gu recorded the highest increase in Seoul, rising by 0.76% in just one week.
Conditions for rental supply in South Seoul are also deteriorating rapidly. The rental supply index for South Seoul jumped from 163.6 in March to 176.2 this week, marking a 12.6-point increase over ten weeks, more than double the increase in North Seoul (6.2 points). While North Seoul's absolute index remains higher, the rapid decline in supply in South Seoul is closing the gap.
In fact, Seocho-gu (0.529%) and Songpa-gu (0.472%) recorded the second and third highest rental increases, respectively, following Dobong-gu, demonstrating a direct correlation between supply deterioration and rising prices. The trend of soaring rental prices is spreading throughout Seoul, regardless of the district.
Gap Between Metropolitan and Regional Markets Triples... Pressure Extends to Southern Gyeonggi
Rental instability is also affecting Gyeonggi Province and Incheon. This week, Gyeonggi's rental supply index reached 178.0, while Incheon's index was 178.6, indicating a simultaneous rise across the metropolitan area. In contrast, the gap with the five major cities (165.4) has widened from 4.2 points in the third week of March to 13.9 points this week, more than tripling. This reflects a deepening supply imbalance as the entire metropolitan area absorbs rental demand.
Within Gyeonggi, the southern region, which is more accessible to Seoul, has seen particularly notable increases. Gwangmyeong recorded the highest increase in Gyeonggi at 0.655%, followed by Gunpo (0.440%) and Gwacheon (0.423%).
Supply Lockdown and Tax Pressure Create Dual Challenges... Structural Supply Decrease
The direct causes of the rental supply shortage include the withdrawal of listings following the resolution of reverse rental issues and the reintroduction of increased capital gains tax for multiple homeowners. Properties that flooded the market during the rental price decline of 2023-2024 have been withdrawn as prices rebounded, leading to a decrease in available listings. The reintroduction of the increased capital gains tax on multiple homeowners on May 10 has further exacerbated the supply lockdown. Analysts suggest that homeowners who have opted not to sell are either maintaining their rentals or converting to monthly leases, creating dual pressures on rental supply.
As the number of new apartments entering the market in the metropolitan area is expected to decrease in the second half of the year, market tension is rising. Analysts warn that if the rental supply index surpasses 190 without an increase in supply, a phase of rapid rental price increases could become a reality. One expert stated, "We are currently at a stage where the supply imbalance is spreading simultaneously across all of Seoul and the outskirts of the metropolitan area. If the number of new apartments decreases in the second half of the year, the speed at which rental market instability transfers to the sales market could accelerate."
* This article has been translated by AI.
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