As the government holds to an owner-occupancy-centered policy in the name of stabilizing the home sales market and curbing speculation, Seoul's rental market is facing an unprecedented supply cliff and surging rents. New apartment move-ins in Seoul have been falling rapidly since last year, and with mandatory owner occupancy layered on top of rules targeting multiple-home owners and registered rental businesses, jeonse (a lump-sum deposit lease) and monthly-rent listings that should be flowing into the market are instead being locked up. Tenants, worried they may not be able to find a jeonse home at all, are choosing to renew and stay put, accelerating the contraction in rental supply. Critics say that while the government has tightened rules by treating jeonse loans as a key driver of rising home prices — speeding up the shift from jeonse to monthly rent — it has failed to produce any pointed measures even as instability in the rental market deepens.
According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 29th, renewals accounted for 50.8% of Seoul apartment jeonse contracts signed between January and August this year, up 23.6 percentage points from 27.2% in 2023, just three years earlier. That means one of every two tenants who signed a jeonse contract this year chose to stay in their existing home rather than find a new one or move elsewhere. The total volume of Seoul apartment jeonse contracts through August fell 25.7% from a year earlier, with a 38% plunge in new contracts driving the decline.
A similar pattern emerged in the monthly rent market. Renewals made up 39.7% of Seoul apartment monthly-rent contracts from January to August, up 7.9 percentage points from 31.8% last year. Total monthly-rent transactions edged down from a year earlier, but renewals rose 22.5%, making the increase in re-contracting more pronounced in monthly rent than in jeonse.
What stands out is that even as the share of renewals climbed sharply, use of the contract renewal request right, which caps rent increases at 5%, actually declined. Among jeonse renewals, the share using the renewal right fell to 53.3% this year from 56.7% last year, while for monthly rent it dropped to 30.3% from 37.2%. Industry participants read this as a sign that more tenants are agreeing to re-contract with landlords rather than invoking the renewal right now, preserving it for later use.
With tenants staying in their existing homes, already scarce rental listings show no sign of increasing. According to real estate big data platform Asil, Seoul apartment jeonse listings fell 16.7% over the past year to 19,853 from 23,832, while monthly-rent listings plunged 15.3% to 16,406 from 19,480. Jeonse and monthly-rent listings are evaporating together, without even the balloon effect of avoidance of jeonse translating into more monthly rentals.
The drop was steepest in northeastern and southwestern Seoul, where cheaper jeonse and monthly-rent listings are concentrated. Jeonse listings in the northeast, which includes Nowon, Dobong and Dongdaemun districts, fell by 1,869, or 43.2%, to 2,459 from 4,328 in a year, while the southwest, home to Guro, Geumcheon and Gwanak districts, lost 991 listings, or 33.3%. Only southeastern and northwestern Seoul, where large complexes such as DH Bangbae in Seocho District (3,064 units) and Hillstate Medialle in Eunpyeong District (2,451 units) were completed this year, held listings steady or saw slight increases.
With listings falling throughout the year, jeonse prices have passed their 2022 peak and are heading toward record highs. According to the Korea Real Estate Board, the median jeonse price for a Seoul apartment reached 560 million won in August, up 12.4% in a year and level with the median in January 2022, the highest since the data series began.
Experts say that with move-ins set to fall by about 3,400 units next year and by 10,000 units the year after compared with this year, it is time to focus policy on expanding rental supply. Along with increasing supply of new apartments and low-rise multi-unit housing, they say the government should actively consider easing rules that could stabilize the jeonse and monthly-rent market in the short term.
Yoon Su-min, a real estate specialist at NH NongHyup Bank, said easing rules in land transaction permit zones alone, which force landlords to move in themselves, would let listings now tied up for sale flow into the rental market and provide immediate relief. Ham Young-jin, head of the real estate research lab at Woori Bank, said that while the government has pledged to expand public rental housing, it is not enough to cover rental demand from young adults and single-person households in urban centers. Rather than excluding the private sector out of a framework that no benefits can be given to multiple-home owners, the government needs to systematically cultivate sound private rental operators to supply quality long-term monthly rentals, Ham said.
Some argue that the existing stock of registered rental operators, which has served as a breakwater for the jeonse and monthly-rent market, needs to be preserved. If Seoul's 37,000 registered rental apartments disappear in stages through 2028, market instability could be magnified, so benefits should be revived at least temporarily to keep the existing stock in the market, they say.
Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, said private redevelopment and rebuilding projects in Seoul take an average of 14 years and six months to break ground, and public land development takes at least five to six years, so long-term supply measures offer no quick fix for the current rental crunch. While the policy intent of encouraging sales of registered rental apartments to expand for-sale supply is understandable, maintaining rental housing stock matters more right now, Shin said.
