"Unprecedented shortage of Jeonse and monthly rent in Seoul"... Director Kim Hak-ryeol analyzes metropolitan area real estate demand

In the metropolitan area real estate market, the phenomenon of an unprecedented shortage of Jeonse (lump-sum deposit lease) and monthly rent supply in Seoul is continuing. Director Kim Hak-ryeol of the Smart Tube Real Estate Research Institute appeared on the recent YouTube channel 'Understanding: All the Knowledge in the World' to analyze the current shortage of rental supply in Seoul and the structural causes of housing demand.

Sharp decline in Seoul's Jeonse and monthly rent supply, influenced by decreasing move-in volume and regulations

Director Kim Hak-ryeol diagnosed that, unlike in the past when a 1,000-unit complex typically had about 50 Jeonse and monthly rent units (around 5%), the current situation is an unprecedented one where it has decreased to the level of 1 to 3 units. He cited the decrease in new move-in volume as one of the causes of this supply shortage. His analysis shows that as the move-in volume of apartments in Seoul has decreased from around 40,000 in the past to the current level of 20,000, the rental supply provided at the time of move-in has also decreased by nearly half.

Furthermore, he explained that government regulatory policies are acting as a factor that suppresses the supply of Jeonse and monthly rent. In particular, within Land Transaction Permit Zones, purchasing property with a Jeonse tenant is not permitted, resulting in a forced reduction of rental supply as only purchases for actual residence are possible. Director Kim mentioned the need for lifting Land Transaction Permit Zones or reviving the rental business operator system to secure Jeonse supply.

Structural causes of sustained housing demand in Seoul despite population decline

Director Kim explained that the reason housing demand remains high despite the declining population in Seoul lies in 'household division' and 'inflow from provinces' rather than the population count itself. He stated that as the residential pattern has shifted from the past large-family-centered structure to a structure where generations are separated and form independent households, the number of required houses actually increases even if the population count decreases. He analyzed that in addition, demand to enter Seoul from the provinces continues to occur, causing waiting demand to accumulate.

In fact, he explained that cases where residents of high-end areas in the provinces move to major complexes in Seoul demonstrate the flow of demand. Citing a case of owning an apartment in a high-end area of Changwon, Director Kim added that as the grace period for the mandatory residence requirement of major Seoul complexes (such as Olympic Park Foreon, etc.) ends, a structure is being formed where demand from the provinces flows into Seoul, increasing demand in Seoul and decreasing demand in the provinces.

Real estate selection criteria: the importance of jobs and transportation networks

Director Kim emphasized jobs and transportation networks as key indicators to consider when choosing a house in the future. He warned that areas lacking connectivity with Seoul or lacking job growth within the region itself may see a drop in demand. On the other hand, he analyzed that areas where new transportation networks such as GTX are connected or where large-scale industrial complexes such as Samsung Electronics and SK hynix are established are worth noting.

Additionally, he presented Jeonse prices as an important indicator for judging price trends. He explained that areas where Jeonse prices rise steadily for 1 to 2 years are highly likely to lead to future increases in sales prices because they are supported by actual demand. Furthermore, as the aging society intensifies, he predicted that the value of new cities equipped with hospitals, lifestyle convenience facilities, and wide-area transportation networks may grow more than demand centered on school districts.

Source: original video (YouTube)