Seoul Rents Hit Record High Despite Rate Cuts, Surpassing 1 Million Won

"Just breathing costs 900,000 won to vanish" – Seoul monthly rents have truly gone crazy.

Seoul apartment monthly rents recorded their highest growth rate in 10 years since statistics began in 2016, data showed. The surge stems from insufficient new housing supply combined with tighter lending regulations that blocked gap investments, sharply reducing jeonse (lump-sum deposit lease) properties. Analysts predict the jeonse shortage and soaring monthly rents will continue if the capital gains tax moratorium for multi-home owners expires and property holding taxes increase.

According to Seoul Economic Daily's analysis of KB Real Estate monthly time-series data, Seoul apartment monthly rent growth reached 8.51% last year – the steepest increase since related statistics began in December 2015. The Korea Real Estate Board's integrated rent price index also showed Seoul apartment monthly rent growth at 3.94% last year, the highest since statistics began in 2016.

Monthly rent prices exceeded 1 million won for the first time in history. According to the Korea Real Estate Board, the median monthly rent for all housing types including multi-family units, row houses, and apartments in Seoul reached 1.007 million won in December last year. Narrowing to apartments only, the median monthly rent rises to 1.24 million won. This means those without owner-occupied housing in Seoul must spend over 1 million won monthly as fixed housing costs. The median represents the middle value when survey subjects are arranged in order, typically lower than averages skewed by ultra-premium samples from Gangnam's three districts or Yongsan.

Behind the rent surge lies the disappearance of jeonse and the consequent shift from jeonse to monthly rent. As the government tightened jeonse-backed loans, tenants reluctantly turned to monthly rent contracts. In October's policy measures last year, the government included single-homeowner jeonse loan interest in debt-to-income ratio calculations, making it impossible for individuals to simultaneously service mortgage loans on investment properties and jeonse loans on residential properties. Additionally, mandatory owner-occupancy requirements at purchase blocked "gap investments" using jeonse, cutting off supply.

Consequently, Seoul's jeonse and monthly rent listings decreased by nearly 10% over the past year. The jeonse decline is particularly dramatic. According to Asil, Seoul's jeonse listings stood at 21,474 as of the reporting date, down 23% from 27,870 a year ago. While monthly rent listings increased 11.5% from 17,766 to 19,824, this fails to compensate for the reduced jeonse inventory.

With jeonse supply blocked, the jeonse-to-monthly-rent conversion rate – the interest rate applied when converting jeonse deposits to monthly rent – has turned unfavorable for tenants. According to KB Real Estate Data Hub, Seoul's conversion rate reached 4.26% in December, up 0.12 percentage points from 4.14% in January. This contrasts with the Bank of Korea's base rate, which fell 0.75 percentage points from 3.25% to 2.50% over the same period. "As jeonse properties dry up, monthly rent suppliers gain stronger pricing power, leading to higher conversion rates," explained Seo Jin-hyung, professor of real estate law at Kwangwoon University.

Seoul apartment monthly rents are likely to rise further. This year's Seoul apartment move-in volume will be halved compared to last year. According to Zigbang, this year's Seoul apartment move-ins total only 16,412 units, down 48% from last year's 31,856 units. Metropolitan area move-in volume also drops 28% from 112,184 units this year to 81,534 units next year.

Another concern is that jeonse and monthly rents are chasing last year's surging sale prices. The Korea Housing Institute's recent "2026 Housing Market Outlook and Policy Direction" report projected Seoul jeonse price growth at 4.7%. The analysis suggests reduced move-in volume, combined with the expiration of multi-homeowner capital gains tax moratorium and mandatory owner-occupancy under land transaction permit zones, will intensify "jeonse property lockup." If jeonse prices rise while conversion rates also increase, monthly rent growth will accelerate uncontrollably.

President Lee Jae-myung's repeated emphasis on real estate market normalization and signals of potential tax reform also fuel instability in the rental market. The president recently posted on social media calling this "the last chance," urging property sales before the May 9 expiration of the multi-homeowner capital gains tax moratorium. Presidential spokesperson Kang Yu-jung stated at a briefing that "the May 9 termination is certain." While Kang explained that "property holding taxes are a premise considered only when all other options are deemed impossible," market observers interpret this as signaling imminent tax reforms including holding tax increases.

Concerns are emerging that government holding tax increases could be passed on to monthly rents, intensifying rental market instability and worsening housing security for ordinary citizens. According to a recent report titled "Early Lee Jae-myung Administration Real Estate Market Status and Policy Assessment" by Professor Lee Chang-moo's research team at Hanyang University, monthly rents rose approximately 20% during the Roh Moo-hyun administration when the comprehensive real estate tax was first introduced, and over 30% during the Moon Jae-in administration when the tax was expanded and strengthened. "If holding taxes are strengthened while monthly rents are already rising, the increase will inevitably grow larger," Professor Lee said.