SEOUL, Korea, Mar 9, 2014 (Korea Bizwire) – The percentage of apartment homes in Seoul’s Gangnam (including the three districts of Gangnam, Seocho, and Songpa) whose “jeonse” (lump-sum deposit on a rental property) price is in excess of 70 percent of sale price has almost quintupled for the past one year. According to DoctorApt, a real estate information provider, on March 8, the number of apartment units whose jeonse price is over and above 70 percent of sale price was 58,473. This is up 4.8 times from March last year when the comparable figure was 10,079.
By district, Gangnam District saw its number of high-jeonse-priced homes rise 4.5 times to 21,119 from 3,811 a year ago. For Seocho District, the figure increased 3.1 times to 15,421 from 3,725. As for Songpa District, the number skyrocketed 7.6 times to 21,938 homes from 2,543 last year.
The main reason for this unnatural state of affairs is the home prices have been on a downward trend for the past few years due to the housing market downturn while the jeonse prices have kept going up as more people opted to take jeonse contracts instead of purchasing or monthly rental.
Since September last year, according to real estate agents in the three Gangnam districts, there has been more demand for home buying that that for jeonse. Real estate professionals said the turning point for home customers to buy instead of rent is jeonse price of about 70 percent of sale price.