[Deep Dive] Metropolitan Real Estate Supply Cliff: Mechanism of Rising Jeonse and Sale Prices

Materialization of a Structural Supply Cliff

As of June 2026, the shortage of 'real estate supply' has emerged as the most critical market indicator in the metropolitan housing market. The sharp decline in housing permits and housing starts—triggered by steep interest rate hikes in 2022 and 2023, soaring construction costs due to raw material price inflation, and the real estate Project Financing (PF) market crunch—is now directly translating into a drastic reduction in housing completions for 2026.

According to recent completion data, the projected volume of new apartment move-ins in the metropolitan area for 2026 is estimated to plummet by approximately 35% compared to 2025. Considering the structural characteristics of the construction industry, where it is nearly impossible to increase new housing supply in the short term, this unprecedented supply cliff is highly likely to act as a persistent upward price pressure across the housing market until at least 2029.

Rising Jeonse Prices Driving Up Sale Prices

The reduction in housing supply is primarily dealing an immediate and severe blow to the Jeonse (lump-sum deposit lease) market. As the supply of new Jeonse listings, particularly for newly built apartments, has virtually dried up, Jeonse prices in key metropolitan areas with high residential preference—such as prime school districts and major transit hubs—are solidifying a strong upward trend.

• Pushing Up Sale Prices: As rising Jeonse prices elevate the Jeonse-to-sale price ratio, the downwardly rigid Jeonse prices are creating a leverage phenomenon, strongly pushing up sale prices from below.
• Conversion of Real Demand to Purchases: Fearing prolonged Jeonse shortages and rising rental costs, actual demanders without homes are converting their demand from renewing leases to purchasing properties, thereby recovering transaction volumes and stimulating price increases in the sales market.

Scarcity of New Builds and Market Outlook

Above all, the absolute scarcity of new apartments within the metropolitan area is being highlighted, making the polarization of asset prices between new and old buildings, and between core and peripheral areas, increasingly distinct. Many market experts forecast that housing prices in the metropolitan area will show an annual increase of about 4.5% in 2026, analyzing that the structure in which the Jeonse price growth rate consistently exceeds the sale price growth rate will become entrenched and drive the overall market.

Consequently, the real estate supply shortage confirmed as of 2026 is a firm signal of a medium- to long-term restructuring of the asset market. Market participants need to closely monitor potential changes in interest rate policies in the second half of the year and the effectiveness of government-led supply measures, while adopting a selective, location-based asset allocation strategy.