Seoul's housing market is showing clear signs of a "triple surge," as a jeonse and monthly rent crisis materializes and previously subdued home prices begin to climb again. The Korea Real Estate Board reported on the 17th that Seoul apartment sale prices rose 3.1 percent from the beginning of this year through the second week of this month (as of the 11th). With the end of the government's moratorium on heavy capital gains taxes for multi-home owners, the rate of increase, which had been slowing, rebounded — roughly double the 1.53 percent rise during the same period last year. The rental market is even more severe. Jeonse prices, with listings increasingly hard to find, jumped 2.89 percent over the same period, six times higher than the 0.48 percent rise a year earlier. Monthly rents, hit by the spillover from the jeonse shortage, also rose 2.39 percent through April this year — far above the 0.57 percent increase recorded a year ago.
The outlook is even more troubling. Contrary to the government's assurance that "there will be no listing freeze," Seoul apartment listings have noticeably declined since the revival of heavy capital gains taxation. If wealth swollen by the booming stock market begins to flow in earnest into real estate, concerns over housing instability are likely to intensify. A pressured government has played the card of suspending the two-year actual-residency requirement to draw out non-resident single-home listings, but its effectiveness is questionable, as single-home owners are more likely to opt for actual residency than to sell. There are growing concerns that, instead, Seoul's roughly 830,000 non-resident single-home households may convert en masse to actual residency, worsening the jeonse crunch. Given this reality, there are no shortage of cases in which households are giving up jeonse and reluctantly turning to home purchases on the outskirts. The fact that April bank mortgage loans surged by 2.7 trillion won from the previous month, driving the rise in household debt, may be evidence that real estate stability remains a distant goal.
Excessive curbs on real estate are more likely to stoke confusion and distortion than to calm the market. The "triple burden" of soaring sale, jeonse, and monthly rent prices in Seoul apartments is the market's warning against the government's regulatory absolutism. The side effects of policies that suppress the market by force will ultimately fall squarely on young people and ordinary citizens. The policies needed for housing stability and a normalized real estate market are not excessive lending and tax regulations, but bold and effective supply expansion and regulatory easing that reflects reality. This is a lesson left by successive administrations that must not be forgotten.
