The jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) shortage for apartments in Seoul and the greater metropolitan area has worsened to its highest level in about five years. According to the Korea Real Estate Board, Seoul's apartment jeonse supply-demand index stood at 108.4 in the third week of April. This is the highest level since the fourth week of June 2021 (110.6), when the impact of the "two-bill rental law" enacted under the Moon Jae-in administration was in full swing. In particular, the Gangbuk area north of the Han River in Seoul posted 109.9, the highest since the fourth week of March 2021. Gyeonggi Province (102.4) also reached its highest level since the second week of November 2021. Even in large apartment complexes with more than 1,000 units, finding a jeonse listing is said to be like catching a shooting star. Monthly rents have risen in tandem, shaking the housing stability of ordinary households.
According to data from the Ministry of Land, Infrastructure and Transport (MOLIT), annual housing construction starts in Seoul, which averaged around 60,000 units between 2021 and 2022, were nearly halved to around 30,000 units annually between 2023 and 2025. This has translated into a decline in move-in supply, with the number of homes completed in Seoul in January and February of this year falling to 5,520 units, or 78.3% of the figure for the same period last year. To make matters worse, jeonse listings have plunged not only for newly built homes but also for existing housing stock. This is largely due to the government ending the moratorium on heavier capital gains tax rates for multi-home owners and declining to extend loans. As multi-home owners sold properties under government pressure, existing tenants have found it difficult to renew their jeonse contracts.
The government must face the paradoxical reality that its regulation-heavy policies — including punitive taxes and tighter lending — aimed at reining in home prices have instead amplified housing insecurity for ordinary citizens. Under President Lee Jae-myung's mandate to "crack down on real estate speculation," authorities are now even weighing the abolition of the long-term holding special deduction for non-resident single-home owners. Signs point to a sweeping, department-store-style tax overhaul encompassing capital gains taxes, holding taxes and more. There is concern that, by neglecting to address supply shortages, the government may be retracing the path of the Moon Jae-in administration, which triggered a jeonse crisis five years ago. To avoid repeating past policy failures, the government should communicate thoroughly with the market in advance and carefully calibrate the direction, scope, intensity and pace of its policies. Above all, rather than short-term prescriptions that merely suppress demand, it is essential to offer fundamental solutions that expand new housing supply and foster a virtuous cycle of transactions in existing housing stock.
