In the first half of this year, there were many landlords in major areas of Seoul who were struggling because they could not find tenants even after lowering the rent by hundreds of millions of won. However, recently, cases of renewing leases by raising the deposit more than before are coming out one after another. This is because the government has introduced measures to reverse the trend (lease prices are lower than at the time of signing the contract) and loan interest rates have fallen, leading to an upward trend in rent prices in Seoul for three months. As the number of rental properties is decreasing in the market, it is predicted that the market environment will continue to be favorable to lessors (landlords) for the time being.
○ Gyeonghuigung Palace jeonse 200 million won ‘mugwort’
According to the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system on the 30th, a lease renewal contract for an 84㎡ exclusive area of Jamsil L’s in Jamsil-dong, Songpa-gu, Seoul was signed this month with a deposit of 990 million won. Compared to the previous contract (945 million won), the deposit increased by 45 million won. Considering that there were many renewal transactions with lower rental prices at the beginning of the year, the atmosphere has clearly changed. Last January, a renewal contract for 84 m2 of this apartment was signed for 820 million won, a 280 million won reduction from the previous 1.1 billion won.
The situation is similar in Gyeonghuigungjai, Hongpa-dong, Jongno-gu, which is considered the ‘biggest city’ in Gangbuk. A tenant who paid a deposit of 700 million won and monthly rent of 500,000 won and lived in an exclusive 84㎡ unit in this complex renewed the lease contract this month, deciding not to raise the deposit but paying 1 million won, double the monthly rent. The new lease deposit for this apartment, which fell to 850 million won in February, jumped to 1.05 billion won this month. This month, there were cases of renewal of contracts by raising the deposit or monthly rent at Raemian Daechi Palace in Daechi-dong, Gangnam-gu, and Mapozai in Yeomni-dong, Mapo-gu.
At the beginning of this year, the decline in house prices and the reverse스포츠토토 rent crisis coincided with a sharp drop in rental prices. Rent prices in Seoul rebounded in May as demand for jeonse increased due to the judgment that jeonse prices had hit bottom. The interest rate effect was also significant. According to the Korea Real Estate Agency, the jeonse-to-monthly rent conversion rate for apartments in Seoul rose from 4.5% in January to 4.8% in June. During the same period, the average interest rate on deposit loans in the banking sector (based on new loan amount) fell from 4.96% per year to 4.14% per year.
Villa tenants who were hit hard by lease fraud also moved to the relatively safer apartment rental market. The government’s proposal last month to ease restrictions on loans only for the purpose of returning jeonse deposits in order to resolve concerns about a reverse rent crisis also had an impact in putting an end to the downward trend in jeonse prices.
○Lease listings decrease, sales increaseThere is a possibility that rental prices will rise further in the future due to the supply and demand imbalance. First, the number of leased properties on the market is decreasing. According to Asil, a real estate big data company, as of this day, the number of leased apartments in Seoul was 31,111, a 37.5% decrease compared to six months ago (49,776). The decline was large in Dongjak-gu ( -63.5 %), Gwangjin-gu ( -61.3 %), and Mapo-gu ( -60.4 %).
During the same period, apartment listings in Seoul increased by 26.1% from 56,587 to 71,386. The analysis is that as sales prices began to rise, the number of landlords willing to sell their apartments rather than lease them increased. However, the gap between buyers and sellers surrounding the appropriate price is widening, and the buying trend is not strong. Conversely, this can be seen as there is a lot of demand to continue to stay in jeonse.
The decrease in the supply of new apartments is also expected to act as a factor in increasing rent prices. According to real estate R114 , the number of households moving into Seoul will decrease from about 26,000 households this year to about 14,000 next year. Park Hap-soo, an adjunct professor at the Graduate School of Real Estate at Konkuk University, said, “There is a high possibility that rental prices will rise next year due to the supply gap. If the high interest rate situation continues, it will be difficult to purchase a house with a loan, so there will be more demand considering renting.” However, as DH First Tier I Park, with 6,702 households, is holding a housewarming event in Daechi-dong in November, there is also speculation that rental prices in the Gangnam area may temporarily drop at the end of the year.