Monthly rent rises, but the jeonse market is in stagnation
A guide to rent advice on cheonsei posted at a real estate agency in downtown Seoul. [연합뉴스]
#. A (worker, 40s), the owner of a built-up apartment in Seoul. After hearing the news that monthly rental contracts are on the rise, he planned to turn Jeonse into a reverse direction ahead of the expiry of his contract. He calculated that instead of maintaining the current deposit, which is cheaper than the surrounding market rate, he would receive a small monthly rent. However, as a result of inquiring with a nearby authorized real estate agent, I was told that the monthly rent was not formed at a higher level than expected and that the contract was highly likely to be concluded only when the deposit was low. It was explained that as interest rates suddenly rose, fewer people were looking for Jeonse or reversal with high deposits. Mr. A thought about reducing the deposit by taking out a credit loan to pay the monthly rent, but he is also burdened by the interest rate.
According to the real estate industry on the 18th, as the demand for monthly rent is increasing compared to the jeonse due to the aftermath of high interest rates, the phenomenon of ‘the poor get richer and the rich get richer’ is occurring among landlords in Seoul and other metropolitan areas. Landlords who entered the housing market early or who have sufficient funds benefited from the ‘monthly rental boom’, but lessors who have recently purchased a house or still need to raise a large amount of money with a deposit for jeonse are facing a crisis of ‘depression of jeonse’.
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Rising monthly rental income, a ‘rice cake of painting’ for some
According to statistics from the Seoul Real Estate Information Plaza, the monthly rental transaction volume for apartments in Seoul in the first half of this year was 42,256, the highest since 2011. The proportion of monthly rental contracts out of all Jeonse and monthly rental transactions was 39.9% and Jeonse was 60.1%, recording the highest and lowest levels in history, respectively.
The price flow of jeonse and monthly rent also diverges. The Korea Real Estate Agency announced that the combined monthly rental price index for apartments in the metropolitan area recorded 104 in June, also recording an all-time high. The monthly rent integrated price index is indexed as of June 2021 (100), and the net monthly rent (deposit is less than 12 months’ worth of monthly rent), quasi-monthly rent (12-240 months’ worth), and quasi-jeonse (more than 240 months’ worth) It is the result of all combined.
In particular, high-priced monthly rental transactions are coming out one after another in residential areas such as the Gangnam area. Looking at the median monthly rent by region, Gangnam-gu had the highest at 2259,000 won, followed by Seocho-gu with 1.76 million won and Yongsan-gu with 1.75 million won.
The increase in monthly rent is being driven by newly built super-high-priced apartments. Last month, Raemian Daechi Palace’s exclusive area of 59 square meters was signed with a deposit of 700 million won and monthly rent of 2.8 million won, despite its small size. This complex was sold for 2.5 billion won in the same month, and the surrounding school districts are excellent, and it is currently tied to the land transaction permission zone, so there is a lot of rental demand.
On the other hand, the price has been steadily declining. According to the Korea Real Estate Agency, the total rental price of apartments in the metropolitan area fell by 0.64% for six months this year.
In particular, the charter for some relatively low-priced apartments is still in place. “There is no school district, and the prices of apartments that are being reconstructed remain the same,” said the representative of H-Authorized Brokerage Office located in Yeongdeungpo-gu.
In this regard, Lee Eun-hyeong, a research fellow at the Korea Construction Policy Research Institute, said, “As the preference for monthly rent is expected to continue in the future, lessors who have recently entered the housing market through gap investment or need a deposit for jeonse to raise large sums of money will continue to experience difficulties.” did.
Researcher Lee said, “In a situation where interest rates are high like now, tenants have no choice but to prefer monthly rent rather than getting a jeonse loan through complicated processes such as preparing documents and getting the landlord’s signature, so market demand for monthly rent, which has been considered a loss to tenants Their sense of resistance is virtually disappearing,” he added.
Reporter Min Bo-reum [email protected]