Seoul Apartment Jeonse Crisis Deepens as Transaction Volume Hits 10-Year Low [Jeonse Deals Halved]

Seoul apartment jeonse transactions fell to the 6,000 range in May for the first time in 10 years, since 2015. Of the city's 25 districts, only three — Gangnam District, Geumcheon District and Jongno District — saw jeonse transactions rise from the previous month. As rental supply has plunged amid a decline in multi-homeowners, concerns are growing that a jeonse crisis is becoming reality.
According to the real estate industry on the 1st, jeonse transactions for Seoul apartments last month totaled 6,269, the lowest since 6,396 in September 2015. In the past 10 years, the only other month when transactions were in the 6,000 range was November 2015, when they reached 6,946.
Jeonse transactions in Seoul are clearly on a downward trend. Apartment jeonse deals, which exceeded 10,000 a month last year, fell to 9,884 in February this year, then dropped further to 8,612 in April before plunging into the 6,000 range in May.
Transactions fell month on month in 22 of the city's 25 districts, or 88 percent. Notably, the decline was broad-based, affecting the three Gangnam districts, the Han River Belt, and outer Seoul areas alike.
Guro District saw the steepest monthly drop, down 48.9 percent. Seodaemun District, Mapo District and Dobong District also plunged by 46.5 percent, 45.4 percent and 41.4 percent, respectively. Most outer districts, including Gangbuk District, Eunpyeong District and Gangseo District, posted declines in the 30 percent range. Even in the three Gangnam districts, transactions fell in Seocho District by 23.5 percent and in Songpa District by 19.8 percent, while Gangnam District was the only one to rise.
The sharp drop in jeonse transactions recently appears to stem from a combination of factors, including fewer move-in units and a decline in rental supply due to owner-occupancy requirements. Yang Ji-young, a senior researcher at Shinhan Premier Pathfinder, explained, "This is the result of structural interactions between government policy and market conditions." She added, "Rental supply also fell because multi-homeowners were selling apartments ahead of the return of heavier capital gains taxes."
In fact, the number of multi-homeowners has been steadily declining since October last year. According to the Court Registration Information Plaza, the index for multiple ownership of collective buildings fell for six straight months, from 11.333 in October last year to 11.206 in April.
Some observers say the figures may still change, as not all jeonse contract filings have been reflected yet. Under current law, contracts for homes with deposits above 60 million won or monthly rent above 300,000 won must be reported to the local community center or other relevant office within 30 days of signing. However, the number of additional filings is expected to be limited. In fact, only four jeonse contracts were signed between May 30 and 31.
As the jeonse crisis effectively takes hold, more people are expected to be pushed out of apartments and from Seoul to the provinces. Those who cannot leave their neighborhoods because of school districts or work are likely to have no choice but to turn to villas, officetels or monthly rent.
kjh0109@fnnews.com Kwon Jun-ho Reporter