Seoul Apartment Prices Rise for 70 Consecutive Weeks: Why is the Supply Shortage Worsening?

Seoul apartment purchase and jeonse (lease) prices have risen for 70 consecutive weeks. This sustained rally, the second longest in history, is primarily driven by a severe 'listing lock-up' phenomenon triggered by the imminent reinstatement of heavy capital gains taxes for multiple homeowners and an escalating jeonse shortage ahead of the autumn moving season.

Tighter Regulations for Multiple Homeowners Lead to Withdrawn Listings

As the government moves to reform real estate taxes, including reinstating heavier capital gains taxes and strengthening the comprehensive real estate tax, market uncertainty is growing. Faced with stricter regulations, multiple homeowners are pulling their properties off the market and adopting a wait-and-see approach, leading to a sharp decline in available listings. In major areas of Seoul, asking prices continue to surge, yet finding an actual property available for purchase has become increasingly difficult.

Severe Jeonse Shortage Pushing Up Purchase Prices

The lock-up phenomenon is not limited to the purchasing market. With the supply of new jeonse listings virtually dried up, there are growing numbers of regions where jeonse price growth is outpacing purchase price increases. As anxiety mounts among end-users ahead of the autumn moving season, some tenants are giving up on finding jeonse properties and reluctantly purchasing homes at inflated asking prices, creating a vicious cycle that further fuels buying demand.

FAQ: Key Real Estate Market Questions

• Q. How long will the upward trend in Seoul apartment prices last?

  A. Unless the current listing lock-up and jeonse shortage are resolved, the short-term bullish trend is highly likely to persist. However, potential additional mortgage regulations from the government and the Bank of Korea's interest rate policies will serve as key variables in the second half of the year.

• Q. Is the jeonse shortage accelerating the shift toward monthly rent?

  A. Yes. Compounded by the lack of jeonse listings and concerns over jeonse loan regulations, the proportion of monthly rent in new lease agreements for Seoul apartments has rapidly accelerated, surpassing 54% for the first time in three years.