A year after the government announced its '10.15 real estate measures' designating all of Seoul as a regulated area and land transaction permission zone, tenants in the city continue to face significant housing cost burdens. The median jeonse price for Seoul apartments has increased by 60 million won over the past year, and even those staying in their current homes are finding it difficult to avoid deposit increases. With monthly rent prices also rising, the rental market remains under pressure despite stringent regulations aimed at stabilizing housing prices.
According to the Korea Real Estate Agency, the median jeonse price for Seoul apartments reached 560 million won in August, up 62 million won (12.4%) from 498 million won in August of the previous year. The median price represents the middle value when all housing prices are arranged in order.
When considering the typical two-year lease period, the burden on tenants becomes even more pronounced. By August 2024, the median jeonse price for Seoul apartments is projected to rise to 480 million won, an increase of 80 million won (16.7%) compared to this year's figure of 560 million won. This means that tenants who signed leases two years ago will have to absorb this increased market rate when seeking new homes after their contracts expire.
In particular, the average jeonse price for apartments in Songpa District surged from 757.34 million won in August 2024 to 941.37 million won this August, a jump of 184.03 million won (24.3%). Gangdong District also saw an increase from 500.82 million won to 603.75 million won, a rise of 129.3 million won (20.6%). Yeongdeungpo and Seongbuk districts experienced increases of 99.54 million won (18.3%) and 84.01 million won (18.7%), respectively.
Last October, the government designated all of Seoul and parts of Gyeonggi Province as adjustment target areas, speculative overheating zones, and land transaction permission zones. Measures included reducing mortgage limits and applying debt service ratio (DSR) regulations to jeonse loans for single-homeowners, tightening demand management across the housing market. However, one year into the implementation of these measures, the rental market in Seoul continues to see rising jeonse prices, adding to tenants' financial burdens.
An analysis by Aju Economy of jeonse contracts reported to the Ministry of Land, Infrastructure and Transport in August found that among renewal contracts where the right to request renewal was not exercised, 44.6% saw deposits increase by more than 5%. Contracts with deposit increases exceeding 10% accounted for 27.1%. This indicates that rising jeonse prices are impacting both new contracts and the renewal process for existing agreements.
For tenants who have already exercised their right to request renewal, the burden may be even greater. Under the Housing Lease Protection Act, exercising this right generally limits deposit increases to within 5%. However, once this right is exhausted and tenants negotiate new contract terms with landlords, this cap may not apply. Tenants facing contract expiration during a period of rising jeonse prices may find themselves with increased financial burdens due to deposit hikes.
Kim Hyo-sun, a senior real estate expert at KB Kookmin Bank, stated, "As jeonse prices continue to rise, the gap between existing contracts and surrounding market rates is widening. When tenants' contracts end and they need to find similar housing with their existing deposits, it becomes challenging, leading to cases where they agree to higher deposits to extend their contracts with landlords."
Even those considering switching to monthly rent to alleviate the burden of jeonse deposits are not finding much relief. The median monthly rent for Seoul apartments reached 1.38 million won in August, an increase of 180,000 won (15.0%) from 1.2 million won a year earlier. During the same period, the median monthly rent deposit also rose from 110 million won to 120 million won, an increase of 10 million won (9.1%). Thus, even when opting for monthly rent to reduce upfront costs, tenants are facing higher monthly housing expenses.
However, securing loans to maintain jeonse is also challenging. The amount available for jeonse loans varies based on the guarantee limits set by guarantee institutions and the assessment criteria of financial institutions. An increase in the deposit does not necessarily lead to a proportional increase in the loan limit, making it difficult for tenants unable to cover additional deposits through loans to either use their own funds or seek alternative financing options.
Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, noted, "Tenants struggling to manage deposit increases may have no choice but to seek additional loans, but the requirements for policy financing are stringent, leading them to potentially rely on loans with relatively high interest rates. If securing funds through loans becomes difficult, they may have to switch to guaranteed monthly rent, which involves paying additional monthly rent."
Experts emphasize the urgent need to expand supply to stabilize the rental market. Concerns are growing that, in a situation where new apartment supply is lacking, the demand for relocation due to redevelopment projects could further increase upward pressure on rental prices.
Professor Shin added, "In a situation where rental listings are scarce, the combined demand for relocation due to redevelopment could lead to rental price increases outpacing sales price increases. It is essential to maintain tax benefits for landlords who comply with rental price increase restrictions until sufficient housing supply is achieved to encourage the provision of rental housing."
According to the Korea Real Estate Agency, the median jeonse price for Seoul apartments reached 560 million won in August, up 62 million won (12.4%) from 498 million won in August of the previous year. The median price represents the middle value when all housing prices are arranged in order.
When considering the typical two-year lease period, the burden on tenants becomes even more pronounced. By August 2024, the median jeonse price for Seoul apartments is projected to rise to 480 million won, an increase of 80 million won (16.7%) compared to this year's figure of 560 million won. This means that tenants who signed leases two years ago will have to absorb this increased market rate when seeking new homes after their contracts expire.
In particular, the average jeonse price for apartments in Songpa District surged from 757.34 million won in August 2024 to 941.37 million won this August, a jump of 184.03 million won (24.3%). Gangdong District also saw an increase from 500.82 million won to 603.75 million won, a rise of 129.3 million won (20.6%). Yeongdeungpo and Seongbuk districts experienced increases of 99.54 million won (18.3%) and 84.01 million won (18.7%), respectively.
Last October, the government designated all of Seoul and parts of Gyeonggi Province as adjustment target areas, speculative overheating zones, and land transaction permission zones. Measures included reducing mortgage limits and applying debt service ratio (DSR) regulations to jeonse loans for single-homeowners, tightening demand management across the housing market. However, one year into the implementation of these measures, the rental market in Seoul continues to see rising jeonse prices, adding to tenants' financial burdens.
An analysis by Aju Economy of jeonse contracts reported to the Ministry of Land, Infrastructure and Transport in August found that among renewal contracts where the right to request renewal was not exercised, 44.6% saw deposits increase by more than 5%. Contracts with deposit increases exceeding 10% accounted for 27.1%. This indicates that rising jeonse prices are impacting both new contracts and the renewal process for existing agreements.
For tenants who have already exercised their right to request renewal, the burden may be even greater. Under the Housing Lease Protection Act, exercising this right generally limits deposit increases to within 5%. However, once this right is exhausted and tenants negotiate new contract terms with landlords, this cap may not apply. Tenants facing contract expiration during a period of rising jeonse prices may find themselves with increased financial burdens due to deposit hikes.
Kim Hyo-sun, a senior real estate expert at KB Kookmin Bank, stated, "As jeonse prices continue to rise, the gap between existing contracts and surrounding market rates is widening. When tenants' contracts end and they need to find similar housing with their existing deposits, it becomes challenging, leading to cases where they agree to higher deposits to extend their contracts with landlords."
Even those considering switching to monthly rent to alleviate the burden of jeonse deposits are not finding much relief. The median monthly rent for Seoul apartments reached 1.38 million won in August, an increase of 180,000 won (15.0%) from 1.2 million won a year earlier. During the same period, the median monthly rent deposit also rose from 110 million won to 120 million won, an increase of 10 million won (9.1%). Thus, even when opting for monthly rent to reduce upfront costs, tenants are facing higher monthly housing expenses.
However, securing loans to maintain jeonse is also challenging. The amount available for jeonse loans varies based on the guarantee limits set by guarantee institutions and the assessment criteria of financial institutions. An increase in the deposit does not necessarily lead to a proportional increase in the loan limit, making it difficult for tenants unable to cover additional deposits through loans to either use their own funds or seek alternative financing options.
Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, noted, "Tenants struggling to manage deposit increases may have no choice but to seek additional loans, but the requirements for policy financing are stringent, leading them to potentially rely on loans with relatively high interest rates. If securing funds through loans becomes difficult, they may have to switch to guaranteed monthly rent, which involves paying additional monthly rent."
Experts emphasize the urgent need to expand supply to stabilize the rental market. Concerns are growing that, in a situation where new apartment supply is lacking, the demand for relocation due to redevelopment projects could further increase upward pressure on rental prices.
Professor Shin added, "In a situation where rental listings are scarce, the combined demand for relocation due to redevelopment could lead to rental price increases outpacing sales price increases. It is essential to maintain tax benefits for landlords who comply with rental price increase restrictions until sufficient housing supply is achieved to encourage the provision of rental housing."
* This article has been translated by AI.
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