A 38% drop in new leases lifts Seoul's jeonse renewal share past half

The land ministry's own volume figures show that the number of Seoul jeonse renewals fell this year ^[2]. Renewals were 41.1% of apartment jeonse contracts in January through August last year, so new leases were 58.9% ^[2]. This year total contracts fell 25.7% and new ones fell 38% ^[3]. For every 100 contracts signed last year, that leaves about 36.5 new leases and 37.8 renewals, out of 74.3. Divide 37.8 by 74.3 and you get roughly the reported 50.8% ^[1][1]. Renewals went from 41.1 to 37.8, down about 8%, so the record share comes from the 38% fall in new leases ^[2].

Monthly rent is where re-signing grew in number. Renewals there rose 22.5% while total transactions slipped slightly ^[4][5]. Working back through the 39.7% renewal share, total monthly rent volume fell about 2% and new monthly leases about 13% ^[3]. Tighter jeonse loan limits are speeding the move from jeonse to monthly rent, the Seoul Economic Daily reported ^[6]. Jeonse renewals falling while monthly ones rise would fit tenants switching terms at renewal, though the published shares do not break out conversions ^[2][4].

The paper puts the thin stock down to a sharp fall in new apartments ready for occupancy, stricter owner-occupancy requirements and rules on multi-home owners and registered rental operators ^[18]. Jeonse listings fell 16.7% over the year to 19,853 and monthly rent listings fell to 16,406, according to the data platform Asil. That is about 7,050 fewer lease listings in all ^[7][4]. The northeast (Nowon, Dobong, Dongdaemun) lost 1,869 jeonse listings, or 43.2%, and the southwest (Guro, Geumcheon, Gwanak) lost 991 ^[8]. Cheaper leases are concentrated in those two regions ^[9]. Together they lost 2,860 of the city's net 3,979 lost jeonse listings, about 72% ^[5]. The southeast and northwest held steady thanks to two new complexes, DH Bangbae in Seocho with 3,064 units and Hillstate Medialle in Eunpyeong with 2,451 ^[10].

The renewal right is the contract term that shows what tenants expect. It grants one extra two-year term, once, with any increase capped at 5% ^[11]. Fewer renewing tenants are using it ^[13]. Agents say more tenants are negotiating with landlords and keeping the right for later ^[14], even when that means a bigger deposit ^[19]. A tenant who uses the right now gets two years of protection in a market where the median price rose 12.4% in a year ^[12]. One who saves it is betting the next reset will be worse. The supply schedule supports the tenants who wait. Experts cited by the paper say the number of apartments ready for occupancy will fall by about 3,400 next year and 10,000 the year after, compared with this year ^[15].

No clear policy response has emerged, the Seoul Economic Daily reported ^[16]. Yoon Su-min, a real estate specialist at NH NongHyup Bank, said easing the rules in land transaction permit zones, which force owners to move into their own properties, would by itself let homes locked up for resale flow into the lease market and provide immediate relief ^[17]. Without a rule change, the shortfall of 10,000 units in two years' time is about 1.8 times the combined size of the two complexes that kept the southeast and northwest steady ^[7]. If tenants use the rights they are saving at the next round of resets, more increases will be held to 5% ^[11]. I think the renewal share is measuring missing new leases. That view is wrong if a later disclosure shows the number of jeonse renewals rising. Through August it fell about 8% ^[2].