Seoul apartment jeonse prices posted their largest weekly gain in six years and four months, with rental demand spilling over into purchases of mid- to low-priced apartments valued below 1.5 billion won ($1.1 million) and pushing up home prices in northern Seoul districts. Bargain listings that flooded the market ahead of the May 9 expiration of the tax moratorium on multiple-home owners have been largely absorbed, while additional supply remains limited, adding further upward pressure on prices.
According to the Korea Real Estate Board on Thursday, Seoul apartment jeonse prices rose 0.22% in the third week of April from the previous week. The gain expanded by 0.05 percentage point from the prior week's 0.17%, marking the highest weekly increase in about six years and four months since the fourth week of December 2019 (0.23%). Jeonse prices rose across all 25 of Seoul's autonomous districts, with the 14 districts north of the Han River (0.23%) outpacing the 11 southern districts (0.21%). Songpa-gu and Seongbuk-gu each posted weekly gains of 0.39%, while Gwangjin-gu (0.35%), Nowon-gu (0.32%) and Gangbuk-gu (0.30%) each jumped around 0.3%.
The core of the jeonse market instability is a shortage of listings. According to real estate big-data platform Asil, Seoul jeonse listings stood at 15,403 as of the 24th, down 33% from 23,060 at the start of the year. A "jeonse cliff" has even emerged in individual districts with fewer than 100 jeonse listings, including Jungnang-gu (52), Gangbuk-gu (56), Geumcheon-gu (63), Gwanak-gu (103), Guro-gu (146) and Seongbuk-gu (161).
The ongoing jeonse crunch is also stimulating the sales market. For example, at Lotte Castle Clasia in Gireum-dong, Seongbuk-gu, recent jeonse contracts for 59-square-meter units reached 750 million won and 84-square-meter units hit 1 billion won, each up 150 million won from the start of the year. With jeonse prices soaring, tenants are instead pivoting toward purchasing homes. According to the Korea Real Estate Board, Seoul apartment sales prices rose 0.15% in the third week of April from the previous week, widening the gain, with particularly pronounced increases in areas concentrated with mid- to low-priced apartments that face relatively lighter lending restrictions. Gangseo-gu (0.31%), Gwanak-gu (0.28%) and Seongbuk-gu (0.27%) led the gains, while Nowon-gu and Yeongdeungpo-gu also saw their increases widen from the previous week.
Amid this trend, the depletion of bargain listings that had drawn concentrated buying demand is adding pressure on prices, analysts say. According to Asil, Seoul apartment listings totaled 74,162 as of the 24th, down more than 5,800 from about 80,000 roughly a month earlier. Listings fell in every district except Jongno-gu and Yeongdeungpo-gu, with steep declines in outer Seoul districts including Jungnang-gu (-13.3%), Gangbuk-gu (-10.2%), Nowon-gu (-9.9%), Seongdong-gu (-9.8%), Gangseo-gu (-9.6%) and Guro-gu (-9.6%).
As trading in mid- to low-priced apartments picks up, previously weak Gangnam-area districts are showing signs of a rebound. Songpa-gu sales prices rose 0.07% last week, ending a nine-week decline and turning higher, while Seocho-gu's decline narrowed. Gyeonggi Province also posted gains of 0.13% for three consecutive weeks, as a "balloon effect" from buyers seeking to avoid lending restrictions continued. "Firm price momentum in parts of Seoul is spreading to non-regulated areas in cities adjacent to Seoul, such as Bucheon, Uijeongbu and Guri," said Nam Hyuk-woo, real estate research fellow at Woori Bank. "In Songpa-gu as well, buying sentiment has broadly improved as bargain listings have been largely absorbed."
Three Backlashes from Six Months of Lending Curbs: Jeonse Shortage, Gangbuk Price Surge, Accelerating Polarization
