Why does the total price of the apartment in Seoul increase by 62 weeks? … “Severe imbalance between supply and demand”

“There are many tenants who are forced to choose a reverse trend as the licensed property disappears.”

On the 3rd, a representative from a real estate agency in Mapo-gu, Seoul, responded to Newsis reporters’ question regarding the housing rental market, saying, “There is a lot of demand for jeonse, but no cheonsei to the sale, so the actual transaction is not going through. ”

Representative Lee said, “As the number of owners who want to convert jeonse to monthly rent has long since disappeared, jeonse property has disappeared. As owners harvest the property or raise the price, there is an increase in the price of jeonse “.

The total cost of the apartment in Seoul is not unusual. It has risen for 62 weeks in a row since the first week of July last year, and the authorized sales shortage is getting worse.
Due to the implementation of the Lease Protection Law, the rent and monthly rent prices increase as the rent and monthly rent prices decrease, and as the proportion of the reverse tax increases (monthly rent in the guarantee department) In the volume of housing rental transactions, the burden of housing among ordinary people is increasing. As jeonse sales are in short supply, jeonse price rise is rarely broken. According to the weekly apartment price trend released by the Korea Appraisal Board, the total price of apartments in Seoul increased by 0.09% from the 31st of last month. Compared to the previous week (0.11%), the increase decreased by 0.2%. It was up 62 weeks in a row, but the pace of advance slowed for the fourth week in a row.

By distinction, the districts called Gangnam 4 such as Gangdong-gu (0.17%), Seocho-gu (0.13%), Songpa-gu (0.13%) and Gangnam-gu (0.13%), which have complexes with high demand for school districts and favorable conditions, led the uptrend. Furthermore, Mapo-gu (0.15%), Seongbuk-gu (0.15%), Eunpyeong-gu (0.12%), and Jungnang-gu (0.10%), which were mainly driven by new apartments or station complexes also increased.

An official from the Korea Evaluation Board explained: “The trend continued to increase mainly in areas with good educational environments and station areas, but the rate of increase decreased as transaction activities contracted due to the implementation of step 2.5 of social distancing “.

In fact, the median rent for apartments in Seoul exceeded 500 million won for the first time. According to KB’s monthly house price trend released by KB Kookmin Bank, the average apartment rent in Seoul this month was 51.1 billion won. It is the highest since June 2011, when the statistics were written.

In particular, as the part of the reverse trend in the cheonsei transaction increases, it is generating the burden of housing for ordinary people. Last month, the proportion of the reverse trend among apartment rental transactions in Seoul was 14.3% (868 cases), the highest this year. It is also an increase of 4.2% from July (10.1%) and 4.4% from June.

By region, the proportion of the reverse trend in Songpa-gu jumped from 14.4% in July to 42.8% last month. Songpa-gu and Gangnam-gu (15.6%). 3 Gangnam-gu, Gangdong-gu (14.0%), Mapo-gu and Gwanak-gu (14.9%) and Seongbuk-gu (16.4%), which recently had a lot of rental prices, such as Seocho-gu (14.0%), showed a high rate of investment.

Unrest in the housing rental market is expected to continue due to the imbalance between supply and demand. This is because the demand for jeonse is increasing due to the aftermath of successive government regulatory measures, while the supply of jeonse is decreasing due to the decline in the new occupation.

Due to the Third Lease Protection Act, a prolonged 0% interest rate, and the effect of two-year actual residence obligations for rebuild members, the number of authorized rentals is gradually decreasing. On the other hand, after the announcement of the 8 · 4 plan with the main objective of supplying a total of 132,000 additional households to Seoul and the metropolitan area, the demand pending subscription has entered the housing rental market, which is acting as a factor in the increase in jeonse prices.

Also, as the property tax burden and low interest rates drag on, the movement of homeowners to convert rent expands. As more and more landlords switch to monthly rent or half cheonsei instead of cheonsei, the amount of rented property is decreasing. This is the reason why it is pointed out that the jeonse leg of September-November, when the time of the renewal of the lease to cheonsei and the fall of Lee Cheol, may become a reality.

Starting in October, the rental ratio to cheonsei, which is the rental standard that applies when converting from cheonsei to monthly rent, will also decrease from 4% to 2.5%. For example, if the landlord converts 500 million won of jeonse into monthly rent with a deposit of 300 million won, when the rent / cheonsei ratio is 4%, the tenant must pay 666,000 won as monthly rent. However, if the rent-to-cheonsei ratio falls to 2.5%, the monthly rent will be reduced to 416,000 won. The tenant’s housing cost burden is reduced so much.

The problem is that there is no proper way to deter the landlord, even if he increases the rent to a level that exceeds the rent-to-cheonsei ratio in the process of releasing the existing tenant and signing a new lease with the new tenant.

Experts predict that the riots in Seoul’s rental housing market will continue.

Dae-Jung Kwon, a real estate professor at Myongji University, said: “As the shortage of properties in Jeonse continues due to the enforcement of the tenancy protection law, such as the monthly tax cap and the right to apply for contract renewal, and strengthening the real-life requirements, the housing rental market is becoming more unstable. In the fall season, when demand is high, there is the potential for pregeneration concerns to materialize. ”

He added: “There is a need for a policy to expand the supply of long-term rental housing where there is demand rather than regulation on the rental period or increase in the rate.”