Mandatory residency rules and reduced rental listings push tenants toward monthly leases, increasing financial strain on households

This year, Seoul's monthly rent price growth rate reached the highest level in 10 years since statistics began in 2016. As the pace of converting jeonse leases to monthly rents accelerates, the upward trend in monthly rent prices is steepening. With the government's October 15 measures strengthening mandatory actual residency requirements across Seoul, the supply of rental properties is expected to shrink further, increasing the financial burden on ordinary citizens.

According to an analysis of KB Real Estate's monthly time-series data, Seoul's monthly rent growth rate from January to October this year was recorded at 7.15%. Gyeonggi Province saw 5.07%, and Incheon 5.96%.

Looking at Seoul's annual trends in monthly rent prices, prices rose slightly from 2016 to 2019. After the implementation of the Three Rental Laws in 2020, prices increased by 1.65%, followed by a 3.56% rise in 2021. The growth rate then expanded, with increases of 4.85% in 2022, 4.95% in 2023, and 5.24% in 2024.

Monthly rent transaction volumes are also rising. According to the Ministry of Land, Infrastructure and Transport, the nationwide share of monthly rent transactions for housing from January to August this year reached 62.2%, surpassing 60% for the first time. In Seoul, 64.1% of transactions were monthly rents.

Following the October 15 measures, the upward momentum in jeonse and monthly rent prices is expected to accelerate, with the share of monthly rent transactions expanding rapidly. This comes as the June 27 loan regulations raised barriers for mortgage loans for property purchases and jeonse deposit loans, forcing more tenants to opt for half-jeonse arrangements. Additionally, the October 15 measures designated Seoul and 12 regions in Gyeonggi Province as land transaction permit zones, imposing a mandatory two-year actual residency requirement. This is likely to further constrict rental supply.

Kim Seon-ah, a team leader at Real House, a real estate evaluation firm, said, "Regulations have made it difficult to secure jeonse deposits through loans, and the mandatory residency requirement will reduce rental listings. As a result, more people will have no choice but to opt for monthly rents."

Seoul Monthly Rent Prices Surge to 10-Year High Amid Tightening Regulations