The burden of monthly rent for apartments in Seoul continues to grow heavier. As declining jeonse (lump-sum deposit lease) inventory coincides with tightened loan regulations, the shift from jeonse to monthly rent is accelerating rapidly, with both the rent index and actual rental prices reaching all-time highs.
According to KB Real Estate's monthly housing price trends released on the 6th, the Seoul apartment monthly rent index reached 131.2 in December last year, the highest figure since records began. This represents a jump of 10.3 points compared to January last year (120.9). The index is calculated based on mid-sized apartments with exclusive floor area of 95.86 square meters or less.
The tangible burden has also increased. Data from the Korea Real Estate Board shows that average monthly rent for Seoul apartments rose from 1.343 million won in January last year to 1.476 million won in December, an increase of more than 130,000 won within a year.
Behind this trend lies a structural transformation in the rental market. As jeonse properties have decreased, jeonse prices have risen, and tenants struggling to secure jeonse deposits have been shifting to monthly rentals. As demand for monthly rentals increased, rental prices rose again, creating a vicious cycle.
Adding to this, the government's June 27 measures (strengthening jeonse loan regulations) and October 15 measures (expanding land transaction permit zones in Seoul and Gyeonggi Province), which reinforced actual residency requirements, have intensified the phenomenon of jeonse properties being "locked up." Amid this supply-demand imbalance, jeonse prices have rebounded, leaving tenants who cannot afford the deposit burden with no choice but to opt for monthly rent.
The share of monthly rentals is indeed expanding rapidly. According to the Ministry of Land, Infrastructure and Transport's actual transaction price statistics, the proportion of monthly rent transactions for housing nationwide from January to November last year reached 62.7%, up 5.3 percentage points from the same period the previous year. The monthly rent share for apartments expanded to 47.9%, while non-apartment housing reached 76.2%.
The Korea Construction Policy Research Institute interpreted this trend as a signal of structural change in its recently published report "Construction Market and Issues Through Indicators." The institute analyzed that "as jeonse inventory continues to decline due to jeonse loan regulations and strengthened actual residency requirements, the conversion to monthly rent is accelerating," adding that "weakened trust in the jeonse market due to the spread of jeonse fraud has also fueled the shift to monthly rent."
The particular concern is the entrenchment of this burden. The institute warned that "if the conversion to monthly rent continues, especially among middle and low-income tenants who lack the capacity to secure jeonse funds, housing cost burdens are highly likely to become structurally entrenched beyond a temporary phenomenon."