Mid-to-lower tier areas in Seoul, which have driven apartment price increases this year, are seeing strong upward trends not only in sales and jeonse (lump-sum housing deposits) but also in monthly rent.

According to the Korea Real Estate Board on November 1, the cumulative increase rate for Seoul apartment monthly rents averaged 7.68% through September, nearly double last year's annual increase rate of 3.94%.

Among Seoul's 25 autonomous districts, Nowon District recorded the highest monthly rent increase rate at 12.88%.

Nowon District showed steep upward trends over the same period, with sales prices rising 11.54% and jeonse rising 12.96%. Along with these, monthly rent also recorded double-digit growth across all three categories.

In recent monthly rent contracts, finding monthly rents in the 2 million won range has not been difficult.

For instance, on October 21, a standard-sized unit (exclusive area of 84 square meters) at Geoyong Complex 3 in Junggye-dong was newly contracted with a deposit of 350 million won and a monthly rent of 2.1 million won. Such monthly rent transactions in the 2 million won range are steadily appearing for standard units.

At Shindongah in Junggye-dong, an exclusive area of 115 square meters was newly leased on October 21 with a deposit of 200 million won and a monthly rent of 3.4 million won, making monthly rents in the 3 million won range no longer uncommon.

Seongbuk District, which has experienced the strongest upward trend in Seoul this year, saw monthly rents rise 11.82% through September.

While Seongbuk District recorded some of the highest rates in Seoul with sales up 14.69% and jeonse up 13.58% through September, monthly rent also rose more than 10%, displaying a triple-strength trend.

On October 8, a unit with an exclusive area of 84 square meters at Dream Forest Kolon langit in Jangwi-dong was newly contracted with a deposit of 40 million won and a monthly rent of 3.25 million won. Monthly rent transactions exceeding 2 million won have become common for highly preferred 59-square-meter and 84-square-meter units.

In addition, other mid-to-lower tier areas that have seen steep rises compared to last year, such as Jongno District (8.93%), Geumcheon District (8.89%), Gangbuk District (8.81%), and Dobong District (8.73%), are also showing monthly rent increase rates that surpass the Seoul average.

In the southern Gyeonggi region, high monthly rent growth was similarly observed in semiconductor belt hinterland areas that have seen strong price trends this year, such as Yeongtong District in Suwon (11.29%) and Giheung District in Yongin (9.72%).

In Dongtan District of Hwaseong, where monthly statistics have been compiled since January this year, the cumulative monthly rent increase rate through September was tallied at 11.31%.

The rise in monthly rents in mid-to-lower tier areas is interpreted as being driven by the ongoing shift toward monthly rentals and a shortage of jeonse supply, combined with the difficulty tenants who signed contracts with low deposits during past reverse jeonse periods face in affording sharply increased jeonse prices thereafter.

From the second half of 2022 through 2023, high-interest-rate shocks caused housing and jeonse prices to fall concurrently, leading to reverse jeonse situations where landlords received lower jeonse deposits than those from immediate previous contracts.

Tenants who signed new contracts with low deposits during this period recently reached the expiration of their lease terms, including a two-year renewal. However, because jeonse prices in mid-to-lower tier areas have risen significantly in the meantime, it has become difficult for them to secure new jeonse housing with their existing deposits.

Nam Hyuk-woo, a real estate researcher at Woori Bank, said, "Even when tenants who contracted during the reverse jeonse period try to move out upon contract expiration, jeonse prices for the homes they want have risen." He added, "Those who find it burdensome to cover the amount exceeding their existing deposit through loans due to past hikes in jeonse loan interest rates sometimes choose to pay the difference as monthly rent."

Nam also noted, "Demand from lease expirations—having exhausted even contract renewals—is likely to increase significantly around February and March of next year." He added, "As February and March are also the peak moving season, such a surge in rental demand could become another factor influencing prices in the jeonse and monthly rent markets of mid-to-lower tier areas, particularly centered around northeastern Seoul."