"Gap Investment is All Failing"... Jeonse Disappears, Korea Becomes a Housing Advanced Country?[Real Estate Walk]

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'6·27 Loan Regulation' is also having a significant impact on the apartment jeonse market. With the prohibition of 'conditional jeonse loans upon ownership transfer', ultra-high-priced monthly rental listings are rapidly increasing, especially in high-priced jeonse areas.
Amid the disappearance of jeonse in non-apartment (villa, officetel, etc.) sectors due to the jeonse fraud aftermath, there is a forecast that apartment jeonse could also quickly disappear due to this measure.

It seems that the government's jeonse loan regulations will come out again. It seems that they will apply DSR regulations to jeonse loans as an additional measure.
So why is the government introducing such measures? It is because they believe that easy gap investment is fueling the 'smart single property' phenomenon. Everyone is all-in on the three districts of Gangnam.
Whether short-term or long-term, investments are made in items that seem likely to rise. There is a jeonse system that allows apartments to be bought and sold too easily through gap investment, so the three districts of Gangnam and Yongsan-gu are still attracting attention even in land transaction permission zones. 
Ultimately, to prevent high-priced apartment gap investment, loans were limited to 600 million won, and multi-homeowners were completely prohibited from receiving housing loans. By analyzing the apartment purchase funding plans in the Seoul area until May this year, 'transactions with inherited rental deposits' account for 40.72%.
If additional regulations further tighten jeonse loans, the apartment jeonse market is expected to quickly transition to monthly rentals, accelerating the disappearance of jeonse.

So if jeonse disappears and only monthly rentals remain, will the housing of the low-income class really become unstable?
Initially, the supply for first-time buyers, youth, newlyweds, and newborn special offers for non-homeowners seems to become a bit smoother. Advanced housing supply using 30 to 40-year mortgages, such as equity accumulation-type housing, is also being promoted. If companies that can supply housing using these mortgages are selected, most new supplies will transition to an advanced country type.
In the case of monthly rentals, the corporate rental housing system already introduced can be utilized. The government can stabilize monthly rental prices as much as it wants with the corporate system. Also, as another supply measure, benefits can be provided when tenants living in jeonse convert their residence to purchase by contracting with the landlord. Acquisition tax can be reduced according to the jeonse period, and transfer tax can be reduced for landlords, allowing many tenants to purchase the jeonse apartments they've lived in for a long time as their own homes.
In fact, whether it's ownership, jeonse, or monthly rental, creating a stable living environment is important. If this measure causes jeonse to start disappearing quickly even in apartments, it seems that the foundation for the rapid establishment of advanced housing environments will be laid. 
The government does not need to worry about gap investment, and concerns about household debt increase due to jeonse loans are also reduced. If jeonse drastically decreases and disappears, the living environment is expected to improve significantly. Of course, there will be a transition period, but if we endure this period well, it is expected to transform into a much better living environment. 

/Choi Won-cheol, Professor of Real Estate Convergence Graduate School, Hanyang University

※This article reflects the author's subjective views and may differ from the editorial direction of this publication.




ljb@fnnews.com Lee Jong-bae Reporter