Seoul’s Rental Market Tightens as Supply Dwindles

Seoul’s apartment rental market is experiencing a surge in prices and a significant decrease in available units, particularly in areas popular with complete-users. This trend is driven by a combination of factors, including increased lease renewals, a preference for monthly rent over jeonse (lump-sum deposit), and a limited number of novel apartments entering the market.

Rental Supply Plummets in Outlying Areas

An apartment complex in Dobong-gu, Seoul, currently lists only four rental properties despite having over 2,000 households. The scarcity of available rentals is particularly acute in areas like Dobong-gu and Guro-gu, where rental prices are relatively lower, and is now extending to surrounding Gyeonggi-do cities such as Seongnam, and Gwangmyeong. Tenants are increasingly choosing to renew existing leases due to difficulties in securing loans, further constricting supply.

Jeonse Prices Rise Amidst Limited Supply

The Seoul apartment rental price index exceeded 100, reaching 100.11, marking 57 consecutive weeks of increases since January of the previous year. The jeonse supply and demand index stands at 166.8, the highest level since September 2021, indicating a significant imbalance between demand and availability. Rental prices in Dobong-gu have reportedly risen by 10-15% in recent months.

Factors Contributing to the Shortage

Several factors are contributing to the tightening rental market. Landlords are increasingly favoring monthly rent over jeonse. The number of apartments moving into Seoul is expected to be the lowest on record this year. The expiration of tax benefits and deferral measures for multi-homeowners on May 9th is expected to exacerbate the situation, as owners may choose to occupy properties previously rented out, reducing the overall rental supply.

Expert Concerns and Government Response

Lee Chang-moo, a professor of urban engineering at Hanyang University, notes that a decrease in multi-homeowner properties directly impacts the jeonse and monthly rent market, creating a supply shortage and putting upward pressure on prices. Despite the government’s efforts to control housing prices, instability in the rental market remains a significant concern.

Looking Ahead

The current trends suggest that Seoul’s rental market will likely remain tight in the near future. The limited supply of new apartments, coupled with the factors driving landlords towards monthly rent and the potential impact of expiring tax benefits, point to continued pressure on rental prices and limited availability.