On December 27, a 49-square-meter unit at Sanggye Jugong Apartment Complex 9 in Nowon-gu, Seoul, was leased for a 30 million won deposit and 1 million won monthly rent. Analysts say the deal—involving a nearly 40-year-old building with a smaller unit breaching the psychological resistance level of 1 million won in monthly rent—illustrates the growing instability in the housing rental market.
Seoul apartment monthly rents posted their highest annual increase in nearly a decade last year. The surge stems from insufficient new housing supply combined with tighter lending regulations that have blocked gap investments, sharply reducing jeonse (lump-sum deposit lease) inventory. Experts predict the rental squeeze and elevated monthly rents will persist if the capital gains tax moratorium for multi-home owners expires and property holding taxes rise.
According to Seoul Economic Daily's analysis of KB Real Estate monthly data, Seoul apartment monthly rents climbed 8.51% last year—the steepest increase since records began in December 2015. The Korea Real Estate Board's integrated rent price index also showed Seoul apartment monthly rents rose 3.94% in 2024, the highest since data collection started in 2016.
The Korea Real Estate Board reported that median monthly rent for all Seoul housing types—including multi-family homes, row houses, and apartments—reached 1.007 million won in December, surpassing 1 million won for the first time. For apartments alone, the median monthly rent climbed to 1.24 million won. This means Seoul residents without their own homes must budget over 1 million won monthly for housing costs alone.
Jeonse Supply Crunch Drives Shift to Monthly Rent
The monthly rent surge is rooted in the disappearance of jeonse properties and the resulting conversion to monthly rent arrangements. As the government tightened jeonse-backed loans, tenants have been forced into monthly rent contracts. The October 15 policy measures included jeonse loan interest in debt service ratio (DSR) calculations for single-home owners, effectively making it impossible to service both investment property mortgages and residential jeonse loans simultaneously. Mandatory owner-occupancy requirements at purchase have also blocked gap investments, constraining supply.
Seoul's combined jeonse and monthly rent listings have dropped nearly 10% over the past year, with jeonse properties declining most dramatically. According to Asil, Seoul jeonse listings stood at 21,474 as of this date, down 23% from 27,870 a year ago. Monthly rent listings increased 11.5% from 17,766 to 19,824, but failed to compensate for the jeonse shortfall.
With jeonse supply constrained, the jeonse-to-monthly-rent conversion rate—the interest rate applied when converting jeonse deposits to monthly rent—has turned increasingly unfavorable for tenants. KB Real Estate Data Hub shows 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, landlords gain stronger pricing power, which translates into higher conversion rates," said Seo Jin-hyung, a professor of real estate law at Kwangwoon University.
Supply Shortage to Intensify in 2025
Seoul apartment monthly rents are likely to climb further as this year's apartment completions will be halved from last year. According to Zigbang, Seoul apartment completions will plunge 48% to just 16,412 units from 31,856 units last year. Greater Seoul area completions will also drop 28% from 112,184 units this year to 81,534 units next year.
Rising rental prices are also catching up to last year's surging sales prices. The Korea Housing Institute forecast Seoul jeonse prices will rise 4.7% in its recent "2026 Housing Market Outlook and Policy Direction" report, citing reduced completions, the expiring capital gains tax moratorium for multi-home owners, and mandatory owner-occupancy requirements under the land transaction permit system.
President Lee Jae-myung's repeated emphasis on normalizing the real estate market and hints at tax reform are adding to rental market anxiety. Lee recently wrote on social media that "this is the last chance," urging multi-home owners to sell properties before the capital gains tax moratorium expires on May 9. Presidential spokesperson Kang Yu-jeong confirmed in a briefing that "the May 9 expiration is certain."
Property Tax Hikes Could Worsen Rent Burden
Monthly rents are likely to continue rising sharply as government regulations have rapidly depleted jeonse inventory, shifting the rental market to favor landlords.
"With no new supply, monthly rents are expected to keep climbing this year," said Yoon Su-min, a real estate specialist at NH NongHyup Bank.
Concerns are growing that property holding tax increases would be passed on to monthly rents, destabilizing the rental market and worsening housing affordability for ordinary citizens. Research by Professor Lee Chang-moo of Hanyang University found that 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 property holding taxes are strengthened while monthly rents are already rising, the increases will only accelerate," Lee said.