Seoul apartment jeonse prices have recorded their highest growth rate in 10 years and six months. According to the Korea Real Estate Board, Seoul apartment jeonse prices this week rose 0.29 percent from the previous week. This is the highest weekly growth rate since the first week of November 2015, when prices climbed 0.31 percent. The sharp rise in jeonse prices is largely due to a shortage of listings. According to data compiled by real estate information provider Asil, Seoul apartment jeonse listings stood at 17,369 as of the 21st of this month, roughly 10,000 fewer than a year earlier. The drop comes as new apartment move-ins in Seoul have decreased sharply, while the government's regulations on multi-home owners have pushed rental listings to be converted into sales.
With concerns over a jeonse crisis mounting and home prices also beginning to stir, housing anxiety among ordinary citizens is growing. Whether the shortage of jeonse listings and the rise in jeonse prices have driven up apartment prices, Seoul apartment prices have widened their gains for three consecutive weeks, expanding from 0.28 percent last week to 0.31 percent this week. This level marks a return to that of January this year, just before the announcement of the measure ending the moratorium on heavy capital gains taxes for multi-home owners. The Seoul apartment monthly rent index has also surged to its highest level since 2015.
As instability in the real estate market rapidly expands, the government announced on the 22nd a plan to supply 90,000 publicly purchased rental housing units in Seoul and Gyeonggi Province over the next two years. However, this is hardly sufficient to stabilize the volatile sales and jeonse markets. While public purchase rental policies are necessary to immediately resolve the supply cliff, measures to revitalize private rentals, which actual end-users are looking for, are more urgent.
The fundamental solution for stabilizing the real estate market lies in expanding supply and easing regulations. Contrary to the government's expectation that "there will be no listing lock-up," Seoul apartment listings have noticeably decreased since the revival of the heavy capital gains tax. The government's intention to resolve the supply shortage by inducing multi-home owners to release their listings has, on the contrary, led to a reduction in listings and a worsening jeonse crunch. The government presented a plan to supply 60,000 housing units in the metropolitan area through its January 29 measures, but execution has been too slow due to discord with local governments. If the simultaneous instability in the apartment sales and jeonse-monthly rent markets continues, the housing stability of the majority of citizens could be irreversibly damaged. Before it is too late, the government must prepare specific measures to stabilize the jeonse market and ease housing anxiety among ordinary citizens. It must review the effects and side effects of existing real estate measures, adjust excessive regulations to fit reality, and accelerate private reconstruction and redevelopment projects.
