(C) The Japan Times

SEOUL – Monthly rent prices for apartments in Seoul have surged to an all-time high this year, driven by a chronic shortage of "jeonse" (lump-sum deposit) rentals and tightened financial regulations. According to the Korea Real Estate Board (REB) on December 21, the monthly rent index for Seoul apartments rose by 3.29% between January and November 2024, marking the first time the annual growth rate has exceeded the 3% threshold since data collection began in 2015.

The upward trajectory intensified in the latter half of the year. After maintaining a modest 0.1% monthly increase early on, the rate spiked to over 0.6% in October and November. Experts attribute this acceleration to the October 15 Real Estate Measures, which designated the entire Seoul area as a regulated zone. These measures effectively blocked "gap investments" (buying homes with existing jeonse leases), leading to a plummet in jeonse supply and forcing tenants into the monthly rental market.

Financial factors have also played a crucial role. High interest rates and increased holding taxes have led landlords to prefer monthly cash flows over large deposits. Simultaneously, stricter loan curbs have made it difficult for tenants to secure jeonse loans, pushing them toward monthly alternatives. Consequently, the average monthly rent in Seoul reached 1.476 million KRW (with a 194.8 million KRW deposit) as of last month. This implies that an average four-person household in Seoul now spends approximately 20% of its median monthly income (approx. 6.1 million KRW) on housing.

The disparity across districts is stark. Songpa-gu recorded the highest spike at 7.54%, followed by Yongsan-gu (6.35%) and Gangdong-gu (5.22%). Meanwhile, the ultra-luxury rental market is also expanding rapidly. This year, 233 transactions exceeded 10 million KRW in monthly rent, a seven-fold increase compared to 2020. The most expensive contract was recorded at Aeterno Cheongdam, where a unit was leased for 40 million KRW per month with a 4 billion KRW deposit.

Outside the capital, Ulsan saw a significant 3.21% increase, fueled by a boom in the shipbuilding industry following the Korea-U.S. MASGA project. As supply remains constrained and demand for high-end housing persists, analysts warn that the "monthly-rentification" of the Seoul housing market is likely to pose a long-term burden on middle-class households.