The share of monthly rent contracts among non-apartment homes in Seoul has surpassed 75%. The shift is attributed to fallout from jeonse fraud cases, the burden of high interest rates, rising apartment prices and a shrinking supply of jeonse listings, all of which have driven up demand for non-apartment housing. As villas and other non-apartment properties increasingly transition to monthly rent (wolse), prices are also climbing sharply. Analysis shows that when non-apartment homes shift to monthly rent, the housing cost burden on vulnerable households rises far more than for apartments, prompting calls to expand rental housing supply and strengthen housing welfare measures, including housing benefits.
According to an analysis of the Ministry of Land, Infrastructure and Transport's (MOLIT) real-estate transaction disclosure system on Wednesday, monthly rent contracts for non-apartment homes — including row houses, multi-family homes, detached homes and officetels — totaled 120,254 between January and May this year, accounting for 75.1% of all 160,150 lease contracts. That means three out of every four contracts were monthly rent agreements, up 4 percentage points from 71.1% during the same period last year.
By type, officetels saw the largest increase, rising 4.8 percentage points to 77.7% from 72.9%. Detached and multi-family homes rose 4.5 percentage points to 84.9% from 80.4%, while row houses and multiplex units climbed 3.3 percentage points to 62.4% from 59.2%. Apartments showed a steeper rise of 5.7 percentage points, but their monthly rent share remained below half at 48.9%.
As the shift from jeonse to monthly rent accelerates in the non-apartment market, monthly rent prices are also rising. According to the Korea Real Estate Board, the cumulative monthly rent increase for row houses and multiplex units between January and April this year was 1.60%, outpacing the jeonse increase of 1.34%. This is the highest gain for the same period since the statistic began being released in July 2015. The average monthly rent paid by tenants of row houses and multiplex units between January and April this year was 562,000 won, up 16,000 won from 548,000 won last year.
The accelerating shift from jeonse to monthly rent is rooted in supply shortages caused by jeonse fraud. Within land transaction permit zones, gap investment has been effectively banned for apartments and for row houses and multiplex units in complexes that include at least one apartment building, reducing the supply of jeonse listings. According to real estate big-data provider Asil, Seoul had 17,715 jeonse listings as of Wednesday, down 30.7% from a year earlier.
A contraction in non-apartment supply is also adding pressure for the shift to monthly rent. According to MOLIT, non-apartment construction starts from 2023 to 2025 stood at just 20–30% of the long-term average for 2016–2025. Non-apartment construction starts in the first quarter of this year totaled 6,563 units, down 3.1% from a year earlier. Tighter guarantee and loan regulations and a slumping construction sector have prevented private new supply from recovering. With reduced new supply, the volume of non-apartment units that will eventually enter the rental market is also bound to be limited, raising the likelihood of continued instability in both jeonse and monthly rent supply and demand.
The government is preparing supply measures to stabilize the rental market, but progress has been slow. Through its plan to expand non-apartment supply, MOLIT plans to provide 90,000 purchased rental housing units in the Seoul metropolitan area by next year, with 66,000 of those concentrated in regulated zones in Seoul and Gyeonggi Province. However, contracts signed between January and April reached only about 3,200 units, just 10.4% of this year's metropolitan-area purchase target of 31,014 units.
Industry observers say the government's standard purchase price fails to adequately reflect rising land costs, construction expenses and financing costs, leaving private operators with little incentive to sell to entities such as the Korea Land and Housing Corporation (LH). When public purchase prices fall short of expected returns, operators are more likely to choose alternatives such as general sales or self-operated rentals. The government has decided to allow partial purchases and ease the minimum purchase standards in regulated zones, but unless actual purchase prices reach a level that meets project profitability, the impact on supply expansion may be limited.
The brunt of the supply shortfall falls on lower-income households. According to a report titled "Trends, Outlook and Policy Direction for the Jeonse and Monthly Rent Market" by Jeon Seong-je, head of the Real Estate Market Policy Research Center at the Korea Research Institute for Human Settlements, when 50% of a non-apartment deposit is converted into monthly rent based on last year's figures, the housing cost burden as a share of income roughly doubles. For the bottom income quintile, the housing cost share jumps from 14% to 29.4%, meaning about one-third of their earnings goes to housing costs. For the top quintile, the share rises from 3.8% to 9.5%. For apartments, the bottom quintile's share rises from 17.4% to 21.2% and the top quintile's from 4% to 5.1%, a smaller impact than for non-apartments. Because monthly rent eats into fixed expenses every month, the same conversion to monthly rent inevitably hits lower-income households harder.
Experts advise strengthening housing welfare policies — including expanded housing benefits such as rental and maintenance allowances, as well as housing finance support — to stabilize housing for low-income and vulnerable groups. "Due to jeonse fraud and other issues, the supply of non-apartment housing needed by vulnerable households has fallen significantly compared to the past," Jeon said. "It is time for policy support, such as strengthening housing benefits and housing finance assistance, to ensure that instability in the rental market does not spill over into housing insecurity for vulnerable populations."
