Supply strains are building in South Korea's rental market as the three-year grace period on a residency requirement for price-capped homes begins to expire at major apartment complexes in the greater Seoul area next year. At Olympic Park Foreon, a 12,000-unit complex in Seoul's Gangdong district, listings for one-year jeonse leases timed to the owners' move-in dates have already appeared.
According to the real estate industry on the 25th, Olympic Park Foreon, which began move-ins in November 2024, has recently seen short-term jeonse listings carrying conditions such as "occupancy until November 2027" and "one-year short term." Of the complex's 12,032 total units, a two-year residency requirement applies to the 4,786 units sold in the general offering. Because owners must live in these homes by next November, when the three-year grace period ends, the complex is seen as the biggest test for gauging the fallout from the grace period's expiry.
Short-term listings at Olympic Park Foreon are appearing at relatively low prices. The asking price for a 39-square-meter unit available for long-term occupancy is currently 750 million won, while a larger 49-square-meter unit that can be occupied for about a year is listed for less, at 700 million won. The constraint of a shorter permitted stay has produced a price reversal, in which jeonse deposits for the larger home are lower.
The grace period on the residency requirement stems from a revision to the Housing Act in March 2024. Homes subject to the price cap must be occupied directly by their owners for a set period, but the revision allowed owners to delay the start of residency to within three years of the first available move-in date. This opened a path for buyers struggling to raise the balance of the purchase price to first lease their units under jeonse and use the deposit to cover their funding. Even at the time, concerns were raised that the market could be shaken if owners' move-ins became concentrated in a particular period three years later.
Beyond Olympic Park Foreon, grace periods will expire one after another next year at newly built complexes in Seoul and Hanam. For e-Pyeonhansesang Godeok Urban Bridge (593 units) in Seoul's Gangdong district, which was occupied in February 2024, the three-year grace period ends around next February, while The Sharp Hanam Edifice (930 units) in Hanam, Gyeonggi Province, occupied in March that year, reaches its deadline around March. Gangdong Heritage Xi, a 1,299-unit complex in Gangdong, was occupied in October 2024 and reaches the end of its grace period around next October. If owners who had leased out their units shift to living in them, existing rental supply could be pulled from the market, centered on Gangdong and Hanam.
The problem is that supply-and-demand conditions in Seoul's rental market are already tight. A drop in new apartment move-ins, combined with regulations on the sales market, has kept jeonse listings scarce and put upward pressure on prices. On top of this, a recent tax overhaul has increased the tax burden of holding high-value homes without living in them, and tax benefits have been restructured around actual time lived in a home rather than length of ownership, developments expected to strengthen owners' incentive to move in.
An industry official noted that "if the grace-period deadlines overlap as well, homes that were being supplied as jeonse could be reclaimed for owners' own use at a faster pace," adding that "especially at Olympic Park Foreon, where the units subject to the residency requirement alone reach 4,786, a large reduction in jeonse supply could stir supply-and-demand instability across Seoul's entire jeonse market, beyond the Gangdong area."
