Tenants in Seoul are staying put rather than moving as instability persists in the city's apartment lease market, with renewals now accounting for more than half of all jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) contracts. Faced with the risk of not finding comparable housing elsewhere, many are choosing to sign again even when it means raising their deposit. As the number of newly built apartments ready for occupancy falls sharply, stricter owner-occupancy requirements and rules targeting multiple-home owners and registered rental operators are keeping listings off the market. Tighter limits on jeonse loans are also accelerating the shift from jeonse to monthly rent, yet no clear policy response to the unsettled lease market has emerged.
Renewals made up 50.8% of jeonse contracts signed on Seoul apartments from January through August this year, up 23.6 percentage points from 27.2% in 2023, just three years earlier, according to the Ministry of Land, Infrastructure and Transport's transaction disclosure system on the 29th. The share rose 9.7 percentage points from 41.1% in the same period last year. That means one in two tenants who signed a jeonse contract this year opted to remain in their current home instead of searching for another. Total jeonse contracts on Seoul apartments through August fell 25.7% from a year earlier, driven by a 38% plunge in new contracts.
Renewals are also rising in the monthly rent market. From January through August, renewals accounted for 39.7% of monthly rent contracts on Seoul apartments, up 7.9 percentage points from 31.8% a year earlier. Overall monthly rent transactions slipped slightly from a year earlier, but renewals rose 22.5%, making the increase in re-signings more pronounced than in jeonse.
Even as renewals climbed, the use of the statutory renewal right declined. The right allows a tenant to demand two additional years of occupancy on one occasion, with any rent increase capped at 5%. Among jeonse renewals, the share invoking the right fell to 53.3% this year from 56.7% last year, while the share in monthly rent contracts dropped to 30.3% from 37.2%. Real estate agents say a growing number of tenants are choosing to negotiate a renewal with their landlord rather than exercise the right immediately, preserving it for later use.
With tenants staying in place, already scarce lease listings show no sign of increasing. Jeonse listings for Seoul apartments fell 16.7% over the past year to 19,853 from 23,832, while monthly rent listings dropped 15.3% to 16,406 from 19,480, according to real estate data platform Asil. Rather than producing a balloon effect in which reluctance toward jeonse pushes up monthly rent supply, both types of listings are disappearing together.
The decline was steepest in Seoul's northeastern and southwestern districts, where cheaper lease listings are concentrated. In the northeast, which includes Nowon, Dobong and Dongdaemun districts, jeonse listings fell by 1,869, or 43.2%, to 2,459 from 4,328 over the year. The southwest, which includes Guro, Geumcheon and Gwanak districts, lost 991 listings, or 33.3%. Only the southeast and northwest held steady or posted slight gains, helped by large complexes that opened this year, including DH Bangbae in Seocho District with 3,064 units and Hillstate Medialle in Eunpyeong District with 2,451 units.
With listings shrinking, jeonse prices have surpassed their 2022 peak and are approaching an all-time high. The median jeonse price for a Seoul apartment reached 560 million won ($400,000) in August, up 12.4% in a year and matching the median recorded in January 2022, the highest since the data series began, according to Korea Real Estate Board.
Experts say policy should now focus on expanding lease supply, noting that the number of apartments ready for occupancy is set to fall by about 3,400 units next year and by 10,000 units the following year compared with this year. Along with increasing supply of new apartments and low-rise multi-unit housing, they say authorities should actively consider easing rules that could stabilize the lease market in the near term.
Yoon Su-min, a real estate specialist at NH NongHyup Bank, said easing rules in land transaction permit zones, which force owners to move into their own properties, would by itself allow homes locked up for resale to flow into the lease market and provide immediate relief. Others say the existing stock held by registered rental operators, which has served as a buffer for the lease market, needs to be preserved. With some 37,000 registered rental apartments in Seoul set to leave the program in stages through 2028, they argue that reviving the associated tax benefits, even temporarily, would keep that stock in the market and prevent instability from peaking.
