Deposit Lease Prices in Seoul Surge
01 January, 2020
Jeonse or Korean-style deposit leases in Seoul have risen 0.38 percent in December, the steepest increase since 0.48 percent in October last year, KB Kookmin Bank said Monday.
The trend reflects market concerns after the government recently announced a new set of measures to contain soaring property prices.
The latest measures include lending restrictions and higher real estate taxes, making it more difficult for ordinary income earners to buy a home.
The jeonse outlook index, a gauge of deposit-lease prices three months from now, stood at 117.3, the highest since it was first compiled in 2016. A reading above 100 means estate agents expecting jeonse to rise outnumber those who do not.
Jeonse soared in the affluent Daechi-dong neighborhood in Gangnam as well as Mok-dong in southwestern Seoul, both highly sought after for their good schools.
An 84 sq.m apartment in Daechi-dong fetched a staggering W1.5 billion deposit on Dec. 23, up W150 million in just over a month (US$1=W1,157).
Jeonse homes are on their slow way out as more and more Koreans now prefer Western-style monthly rentals because the underlying rationale -- that the landlord can earn interest on the deposit –- fades at a time of zero interest rates. But some prefer the old ways and demand for jeonse homes outstrips supply.
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