Monthly rent has overtaken jeonse (a lump-sum deposit lease) in Seoul's apartment rental market. With a shortage of newly completed units, tighter owner-occupancy requirements and a ban on gap investment — buying a home while a tenant's jeonse deposit covers most of the price — sharply reducing the supply of jeonse listings, more than half of this year's lease contracts were monthly rent deals. Jeonse transactions fell nearly 30% from a year earlier, and the number of districts where monthly rent outnumbers jeonse has risen to more than half of Seoul's 25 districts. Analysts say the accelerating shift from jeonse to monthly rent is adding to housing cost pressures on low- and middle-income households.
Of the 172,027 apartment lease transactions in Seoul from January through September, 87,740 — or 51.0% — were monthly rent deals, according to the Seoul Real Estate Information Plaza on the 20th. That is up 7.3 percentage points from 43.7% in the same period last year and marks the first time the cumulative January-September share has exceeded half since the data series began in 2011. The annual share hit a record 44.5% last year and now looks likely to top 50% for the first time this year.
The rising share reflects a sharp contraction in jeonse deals. Jeonse transactions for Seoul apartments totaled 84,287 in the first nine months, down 27.5% from 116,272 a year earlier. Monthly rent deals, by contrast, slipped just 2.8% to 87,740 from 90,310. The decline in jeonse transactions was roughly 10 times steeper.
The number of districts where monthly rent has overtaken jeonse is also growing quickly. Only four districts — Jongno, Jung, Geumcheon and Guro — recorded more monthly rent deals than jeonse deals in the first nine months of last year, but that expanded to 13 this year. Jongno District had the highest monthly rent share at 65.6%, followed by Jungnang District at 64.9%, Guro District at 63.1% and Jung District at 59.6%. Monthly rent also outnumbered jeonse in Gangnam District at 54.0%, Yongsan District at 56.9% and Mapo District at 54.1%.
Tenants face worsening conditions as jeonse listings shrink and monthly rent costs climb, observers say. "Unlike past periods when jeonse prices were rising, what we are seeing now is a structural shift in the rental market from jeonse to monthly rent," said Nam Hyuk-woo, a researcher at Woori Bank's real estate research institute. "With a shortage of new jeonse supply compounded by existing jeonse listings being converted to monthly rent, the shift toward monthly rent in the rental market could accelerate further."