New Seoul apartment complexes lower nearby jeonse prices only within 500 meters

A 500-meter circle covers one sixteenth of the area inside a 2-kilometer one ^[1]. The zone where the researchers found a move-in discount, or rather the zone where it cleared statistical significance, is therefore about 6% of the ground they studied ^[3][1]. Doubling the radius to 1 kilometer quadruples the area ^[2]. According to the report, that mixes in enough unaffected complexes to cut the coefficient to minus 1.07%, about 45% of the 500-meter estimate ^[6][6].

Prices start moving before the buildings fill. Jeonse at nearby complexes had slipped 2.30% before occupancy and was down 5.34% once move-ins began, according to the report ^[4]. Roughly 3 of those percentage points came after the first tenants arrived ^[3].

The claim that tight markets blunt the effect comes from the wording of the report, titled "Heterogeneity in Price Responses to Housing Supply Shocks" ^[1]. "When lease supply is short and liquidity is abundant, the downward effect on jeonse prices was limited or relatively weaker even as move-ins proceeded," the report said ^[8]. "It means the move-in shock works as a real price-adjustment mechanism not on its own, but when combined with the supply and demand conditions the market already has," the authors wrote ^[9]. The figures published from the report do not include a coefficient for the tight-market case ^[8].

Seocho's jeonse index went from 96.74 in January to 100.22 in August ^[13], about 3.6% in seven months ^[4]. An unnamed agent at a brokerage near Raemian Trinity One said prices usually fall during a move-in period, but jeonse asking prices there are close to where they were before ^[12]. Kim In-man, head of the Kim In-man Real Estate Economic Research Institute, pointed to ample liquidity combined with a shortage of lease housing ^[15]. "Until sufficient supply comes through, the jeonse-stabilizing effect from move-ins is likely to remain limited," Kim said ^[16].

Seocho can fit the study in three ways. A district index blends complexes near Trinity One and DH Bangbae with many far from either, and the study itself shows how quickly averaging dilutes a 500-meter effect ^[6]. The move-ins began in the second half of the year, so the August reading covers at most two of the six months the study measures ^[11][9]. Or the report's caveat is at work, with scarce leases and loose money blunting the discount even inside the circle ^[8]. The agent's account supports that last reading. It comes from one agent, though, and asking prices are not contract prices ^[12].

I think the study narrows the case for new supply more than it undercuts it. A large complex does lower nearby jeonse by a statistically significant amount, but for a few blocks and mostly within the first half-year ^[5][7]. A landlord a kilometer away has, on this evidence, little reason to cut a deposit because a complex opened ^[5]. The counter-case is that Seocho already shows the tight-market condition at full strength, in which case even the 500-meter discount disappears when money is loose. Contract deposits within 500 meters of the two Seocho complexes over their first six months would decide it. A fall near the study's 2.39% would mean the district index averaged the effect away; a flat line would make the report's caveat the main result for Seocho ^[5].