Apartment Jeonse and Monthly Rent Transactions Decline: Is a 'Flight from Apartments' Beginning?

▲ A view of property listings posted at a real estate agency in Seoul.

The volume of apartment jeonse (long-term deposit rental) and monthly rent transactions has been noticeably decreasing since the beginning of this year.

The decline in apartment rental transactions appears to be driven by a persistent shortage of available units and rising prices, exacerbated by multi-home owners selling their properties ahead of the implementation of land transaction permit zones and increased capital gains taxes.

In contrast, non-apartment housing types such as villas, which once faced a phobia among tenants due to the aftermath of jeonse fraud, have seen a significant increase in jeonse and monthly rent transaction volumes.

An analysis of housing statistics released by the Ministry of Land, Infrastructure and Transport on July 5 shows that the total volume of housing jeonse and monthly rent transactions nationwide from January to May this year reached 1.236 million, a 2.6 percent increase compared to the same period last year (1.199 million).

While the transaction volume in May decreased by 17 percent compared to the same month last year, the volume in March had increased by 17 percent year-on-year.

The jeonse and monthly rent transaction data, published monthly by the Ministry of Land, Infrastructure and Transport, is compiled by combining reports based on the date of filing with the government and the date of fixed-date stamps issued by the courts, rather than the date of the contract.

There were significant differences by housing type.

From January to May this year, the total number of apartment jeonse and monthly rent transactions was 528,858, a 7.2 percent decrease from the same period last year (569,998).

Conversely, transactions for non-apartments such as row houses, multi-household houses, and detached houses increased by 11.5 percent, from 629,107 in the first five months of last year to 701,756 this year.

In short, apartment rental transactions are shrinking, while transactions for non-apartments like villas are on the rise.

By region, apartment transactions in Seoul fell by 6.5 percent, from 128,051 last year to 119,722 this year. Across the entire Seoul metropolitan area, transactions dropped by 7.1 percent, from 350,448 to 325,641.

In contrast, non-apartment rental transactions in Seoul rose by 6.3 percent, from 244,369 to 259,853. In the metropolitan area, they increased by 8.3 percent, from 442,024 to 4,788,908.

While the absolute volume of transactions in provincial areas is lower, the rate of change was more pronounced. While provincial apartment rental transactions fell by 7.4 percent (from 219,550 to 203,217), non-apartment transactions increased by 19.1 percent (from 187,083 to 222,848).

As Seoul apartment rental contracts decline, the number of months where monthly transactions based on contract dates fall below 20,000 is increasing.

An analysis of the Ministry of Land, Infrastructure and Transport's actual transaction price system shows that the number of Seoul apartment rental contracts in February this year was 19,058 (as of the July 5 survey), the first time it has fallen below 20,000 since September 2024 (16,749).

The figure rose to 21,689 in March, but fell back to 18,187 in April, and as of now, only 16,780 cases have been reported for May.

Experts point to a decrease in supply as the primary reason for the decline in apartment rental transactions.

According to Real Estate 114, the number of new apartment move-ins nationwide (excluding rental apartments) decreased from 320,000 in 2024 to 238,000 last year, and further to 175,000 this year.

Of these, new Seoul apartments amounted to only 24,000 in 2024, 32,000 last year, and approximately 19,000 this year.

Typically, a large volume of rental units hits the market from newly completed apartments, but the number of new apartments has decreased significantly this year.

Experts also believe that the expansion of land transaction permit zones—where buyers are required to reside in the property—to all of Seoul and 12 areas in Gyeonggi Province following the October 15 measures last year has contributed to a reduction in new jeonse listings.

With the implementation of increased capital gains taxes in May, properties put on the market by multi-home owners were largely purchased by non-homeowners capable of residing in them, causing rental listings to disappear whenever a home was sold.

According to data from the real estate platform Asil, as of the July 5 survey, there were 37,551 apartment rental listings in Seoul, a 14.5 percent decrease compared to two years ago (43,917).

This is a 14.8 percent decrease compared to the 44,055 listings on the day of the October 15 measures last year, which expanded land transaction permit zones to all of Seoul.

Low-priced jeonse apartments in the 200 million to 400 million won range in some northern Seoul areas, such as the so-called No-Do-Gang (Nowon, Dobong, and Gangbuk districts), have been experiencing shortages this year.

Possibilities are also being raised that tenants are shifting to relatively cheaper non-apartment housing as commercial banks have tightened criteria for jeonse loans, and the October 15 measures last year made it more difficult for single-home owners to obtain jeonse loans in the metropolitan area and regulated zones by applying the Debt Service Ratio (DSR).

As apartment jeonse prices continue to rise while access to funding is blocked, a phenomenon of leaving apartments is emerging.

In fact, an analysis of the Ministry of Land, Infrastructure and Transport's actual transaction price data shows that the average jeonse deposit for Seoul apartments from January to May this year was 658.75 million won, a 19.1 percent increase from 553.77 million won during the same period two years ago.

This means that tenants signing new jeonse contracts this year are paying 100 million won more than they would have two years ago.

Compared to the average of 613.29 million won from January to May last year, this is an increase of more than 45 million won (7.4 percent) in one year.

For new monthly rent contracts, tenants who paid an average of 1.096 million won (excluding deposit) two years ago are now paying 1.373 million won, a 25 percent increase.

In contrast, the fact that jeonse prices for row houses and multi-household houses have not changed significantly compared to two years ago is also a factor drawing tenants to the villa market.

An analysis of the Ministry of Land, Infrastructure and Transport's actual transaction price data shows that the average deposit for new jeonse contracts for row and multi-household houses rose slightly from 228 million won in 2024 to 235.91 million won in 2025, and 237.64 million won this year.

Experts interpret this as the beginning of a spatial shift in the jeonse market.

Rising jeonse prices are also manifesting as an acceleration in the conversion to monthly rent and an increase in contract renewals.

The proportion of monthly rent for Seoul apartments from January to May, as compiled by the Ministry of Land, Infrastructure and Transport, jumped 7.3 percentage points from 44.0 percent last year to 51.3 percent this year, exceeding 50 percent for the first time since tracking began.

The proportion of monthly rent for non-apartments also rose from 74.0 percent in the first five months of last year to 78.4 percent this year.

Tenants who cannot afford to increase their deposits are converting the deposit increase into monthly rent.

Some also believe that the recent boom in the stock market has influenced the shift toward monthly rent.

Renewal contracts have also increased.

The proportion of jeonse and monthly rent renewal contracts for Seoul apartments from January to May this year was 46.0 percent, a significant increase from the same period last year (40.5 percent).

Among these, the renewal contract rate for jeonse was 51.3 percent, accounting for more than half of all jeonse contracts.

The proportion of tenants exercising their right to renew among renewal contracts is 43.1 percent for all rental types, but it reaches 52.8 percent for jeonse contracts.

In areas north of the Han River, where the jeonse-to-purchase price ratio is relatively high, it is not uncommon for tenants who cannot find jeonse units to switch to purchasing.

Experts predict that in this situation, if the government further tightens jeonse loans in the second half of the year through measures such as reducing loan guarantees or expanding DSR, the involuntary flight from apartments will accelerate further.

President Lee Jae-myung previously pointed out during a press conference marking his first year in office last month that "providing excessive jeonse loans was a primary cause of rising housing prices, which is distorting the market," and signaled a reduction in jeonse loans.

(Photo: Yonhap News)

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