Renters Face Growing Housing Instability Amid Rising Costs

As a reporter covering the real estate market, I have made efforts to capture the various struggles faced by renters in the lease market. This year is different. Just a short while ago, I had to plan and 'uncover' the difficulties of tenants for my reporting, but now, their concerns are coming to me from all directions. Friends, sources, and colleagues alike are voicing their housing anxieties.

The emotional weight behind these words has also changed significantly. Last year, expressions of concern were often just simple complaints of "What can we do?" Now, there is a palpable sense of urgency, with some voices nearing despair, saying, "I might be forced out."

The government has put forth a grand imperative to improve the lease market structure, which has been heavily reliant on jeonse (long-term lease) arrangements, aiming to restore normalcy. While the direction is agreeable, there is a lingering concern that it overlooks significant realities. Before implementing policies, the government should have assessed whether the market could handle the visible difficulties of housing shortages.

The costs of policies overly focused on ideals are becoming evident in the data. According to a survey by the Korea Real Estate Agency, the average jeonse price for apartments in Seoul rose by 0.35% in the fourth week of June, marking the highest increase since the third week of October 2013. The cumulative increase in jeonse prices for Seoul apartments this year has already reached 5.1%, a stark contrast to the 0.95% increase during the same period last year, representing a rise of about 5.4 times. The fallout from jeonse fraud has led to a surge in demand for apartments, pushing jeonse prices to record highs and continuing an upward trend for several weeks.

The reality of workers commuting long distances being pushed to the outskirts due to soaring jeonse prices should not be dismissed as a mere temporary noise in the 'normalization process.' Housing is not a subject for policy experimentation; it is a fundamental aspect of life.

Compounding the issue, the jeonse crisis is also swallowing the monthly rental market. As jeonse listings dwindle and borrowing becomes more difficult, tenants are reluctantly being pushed into the monthly rental market. Recently, the proportion of monthly rentals in Seoul's apartment lease transactions surpassed 60%, reaching an all-time high. With demand surging, prices are naturally following suit. The average monthly rent for apartments in Seoul has already exceeded 1.5 million won, and the monthly rent price index is at its highest level since statistics began in 2015. These indicators show that the burden of housing costs felt by ordinary citizens has truly reached its limit.

Solutions that the market perceives remain elusive. The government's measures to increase non-apartment supply are insufficient to quell the unrest in the already heated apartment rental market. In Seoul, where the jeonse crisis is most severe and urgent remedies are needed, a power struggle between the central and local governments over policy direction continues, exacerbating confusion amid uncoordinated policies.

In a situation where solutions seem to be missing, the ongoing instability in the rental market could ultimately serve as a catalyst for the very housing market that the government is so concerned about. The 'survival purchases' by those without homes, triggered by the rental crisis, have already become a reality. In May, the number of apartment sales transactions in Seoul slightly exceeded the volume of jeonse transactions for the same month. This marks the first time since June 2020 that sales have outpaced jeonse transactions.

No matter how noble the policy goals may be, we must not make the mistake of using the housing instability of ordinary citizens as collateral under the pretext of transition. Policies can reshape the market years down the line. However, renters must live in the present. The next milestone for the government's real estate policy, now over a year in operation, is clear: alleviating the rental anxieties of citizens who worry about where they will sleep tonight should take precedence over lofty goals.