As move-ins begin in earnest at new large-scale apartment complexes totaling more than 5,000 homes in Seoul's Seocho district, attention is focused on whether they can ease the jeonse shortage intensifying across the city. In typical large-complex move-in periods, landlords seeking to pay off their balances often put jeonse units on the market all at once, weakening prices. Jeonse listings in the Seocho area have more than doubled over the past two months, but there is no sign yet of a sharp drop in prices. The mood could shift as actual move-in dates approach, however, drawing attention as a variable in the second-half rental market.
According to real estate platform Asil on Saturday, Seoul's Seocho district had 7,652 jeonse listings, accounting for 38.9% of the city's total 19,722 rental listings. That is more than double the 3,498 listings in early April two months earlier. The surge in rental supply came as Otier Banpo (251 homes) in Jamwon-dong began move-ins this month, followed by large-scale reconstruction complexes including Raemian Trini One (2,091 homes) in Banpo-dong and The H Banpae (3,091 homes) in Bangbae-dong, which are preparing for move-ins starting in August.
Despite the increase in listings, jeonse asking prices have not yet fallen sharply. According to local brokerages, Raemian Trini One in Banpo-dong has the highest jeonse and monthly rent asking prices among the move-in complexes. For an 84-square-meter unit, jeonse is set at around 2 billion won, while a semi-jeonse arrangement runs about 500 million won in deposit plus 6 million won in monthly rent. This is similar to the 2.1 billion to 2.2 billion won asking price for jeonse units of the same size at Raemian One Pentas, which marks its third year of occupancy this year. General-sale jeonse and monthly rent units are about 100 million to 300 million won cheaper than union-member units, due to a regulation requiring landlords to live in their homes within three years.
In the field, school district demand and the regulatory structure are cited as factors slowing price declines. The head of brokerage A in Banpo-dong said, "Union-member units are mostly listed in the 2 billion to 2.3 billion won range, but most general-sale units carry a condition limiting the lease to 2 years and 10 months, so they are relatively cheap. Banpo-dong has very strong school district demand, and Trini One in particular has almost no general-sale 84-square-meter units, which families favor, so there are not many landlords willing to lower prices to bring in tenants."
For Otier Banpo and The H Banpae, jeonse prices for 84-square-meter units are set about 400 million to 500 million won lower than those at Raemian Trini One. As at Raemian Trini One, however, low-priced rental units traded quickly, pushing jeonse prices up by 100 million won each compared with a month earlier.
An official at brokerage B in Jamwon-dong said, "For Otier Banpo's 59-square-meter units, general-sale properties traded at around 1.1 billion won before the pre-inspection, but now the cheap units are all gone and prices start at 1.2 billion won. Union-member units are 100 million to 200 million won more expensive at most, so deals are sparse, but inquiries continue." The head of brokerage C in Bangbae-dong also said, "In the past, it was common to dump units cheaply at move-in time to somehow raise funds, but now, once a low-priced contract is signed, it lasts at least four years, so many landlords are taking a relaxed approach. Last month, 84-square-meter units traded in the low 1.3 billion won range, but those prices are now mostly false listings."
Experts believe the mood could change as actual move-in dates draw near. Ham Young-jin, head of the Woori Bank Real Estate Research Lab, said, "Seocho jeonse, even for small units, costs at least 1 billion won, so demand was already low. With regulations such as the 'ban on jeonse loans before ownership transfer,' tenants are also blocked from new-build jeonse loans, limiting demand to the cash-rich. With supply pouring in but demand limited, a weak market could unfold." Early this year in Jamsil, move-ins took place simultaneously at Jamsil Raemian I'Park (2,678 homes) and Jamsil Le-El (1,865 homes), and jeonse for "national-size" units fell from around 1.8 billion won in January to around 1 billion won in March.
Some observers say, however, that such a "move-in effect" is unlikely to lead to a resolution of Seoul's jeonse shortage. Yang Ji-young, senior expert at Shinhan Premier Pathfinder, noted, "More than 5,000 homes is not a small volume, but it is not enough to meet demand at a time when new-build supply in Seoul is severely lacking. Even if jeonse prices fall somewhat around the move-in period, prices are so high that it is not easy for tenants from other areas to move in."
