Metropolitan Housing Market Amid Tighter Loan Regulations: Accelerated Shift to Monthly Rent and Polarization

Macroeconomic Shifts and the Current State of Metropolitan Housing

Strict loan regulations implemented to manage household debt are fundamentally reshaping the real estate landscape in the metropolitan area. The government has capped the 2026 household loan growth target at a stringent 1.5%, enforcing strict overall volume management to ensure macroeconomic soundness. Measures such as restricting mortgage maturity extensions for multiple-home owners indicate a clear intent to decouple the financial and real estate markets. While this reduction in liquidity has constrained buyers' financing capabilities and led to an overall wait-and-see approach, a distinct decoupling is occurring. Inquiries for properties in prime metropolitan locations and major new cities remain robust.

Concentration in Prime Locations and Supply Shortage Concerns

Despite macroeconomic liquidity constraints, the preference for specific assets has become more pronounced. Areas benefiting from large-scale semiconductor clusters, such as Dongtan New City, and highly accessible complexes near major corporate shuttle routes continue to see steady buyer interest, primarily from actual end-users.

This trend is largely driven by looming supply shortage concerns. Given the cumulative decline in housing permits and the contraction in housing starts following recent project financing crises, a shortage of new apartment supply within the next two to three years is highly anticipated. Consequently, buyers with sufficient capital are preemptively securing high-quality assets, concentrating demand in areas with distinct locational scarcity.

Structural Changes in the Rental Market: Accelerated Shift to Monthly Rent

Alongside the polarization in the sales market, a structural paradigm shift is underway in the rental market. Most notably, the transition from Jeonse (lump-sum deposit) to monthly rent is accelerating. As banks tighten limits and underwriting standards for Jeonse loans, it has become increasingly difficult for tenants to secure large deposits.

Furthermore, a sharp drop in new apartment construction has led to a persistent shortage of Jeonse listings. Landlords are highly incentivized to offset holding taxes through monthly rental income, while tenants are increasingly accepting semi-Jeonse or pure monthly rent contracts rather than stretching their finances for massive deposits. Recent statistics show that the proportion of monthly rent in new rental contracts is reaching record highs, directly increasing the real housing burden for households in the metropolitan area.

Future Outlook and Market Implications

Given the authorities' firm commitment to household deleveraging, the current stance on loan regulations is unlikely to be relaxed in the short term. Therefore, the metropolitan housing market has completely transitioned from a broad rally driven by abundant liquidity to a differentiated market centered on location and fundamentals.

Market participants should avoid expecting uniform price appreciation and instead conservatively assess their financing capabilities based on interest rate volatility and personal cash flow. Additionally, the structural shift toward monthly rent will likely reduce household disposable income, making it necessary to monitor its indirect impact on broader domestic consumption.