Seoul is facing a severe shortage of jeonse and monthly-rent properties, pushing rental prices and supply-demand indices to multi-year highs [1, 2].
The shortage creates a precarious environment for tenants in South Korea's capital. As available housing disappears, renters face steeper costs to secure homes, which can destabilize household budgets and increase the demand for more affordable, lower-quality housing.
Data from the Korea Real Estate Board shows the Seoul apartment jeonse supply-demand index reached 122.5 during the second week of June 2024 [2]. This figure is the highest level seen since the third week of February 2021, when the index sat at 122.8 [2].
The board said that the index uses 100 as a baseline, and as the number approaches 200, it indicates that there are more people seeking properties than there are landlords offering them [1].
Monthly-rent markets are experiencing similar pressure. The supply-demand index for monthly rentals reached 114.8 last month, marking a month-over-month increase of 5.1 points [2]. These tightening conditions have contributed to a cumulative jeonse price increase that is approximately six times higher than the previous year [2].
Several factors are driving the current crisis. The Korea Real Estate Board said the cause is a combination of a lack of new supply and an increase in tenants renewing their existing contracts [1].
Industry data points to a decline in construction starts between 2022 and 2023 as a primary contributor to the current lack of inventory [2]. Additionally, multi-home owners have begun selling properties following the expiration of a capital-gains-tax deferral period, further removing rental units from the market [1, 2].
“Seoul is facing a severe shortage of jeonse and monthly-rent properties.”
The convergence of reduced construction starts from 2022-2023 and the end of tax deferrals for landlords has created a structural supply vacuum. Because the jeonse system relies on large deposits that function as loans to landlords, a shortage of these units often forces tenants into the monthly-rent market, creating a secondary price surge across all rental tiers in the city.
