Multi-unit residential buildings seen from Namsan in Seoul. [Herald DB]
Multi-unit residential buildings seen from Namsan in Seoul. [Herald DB]

Rowhouses and multi-unit homes in Seoul — long shunned in the wake of widespread jeonse fraud — are drawing renewed interest as the burden of renting an apartment in the capital grows. Transaction volumes are climbing, rents are rising, and a growing share of tenants are invoking their lease renewal rights to stay put.

Data from the Ministry of Land, Infrastructure and Transport's actual transaction price system show that Seoul rowhouse and multi-unit jeonse and monthly rent deals totaled 49,679 from January through April this year, up 7.4 percent from 46,244 in the same period last year, according to Yonhap News Agency.

Compared with the preceding four months — September through December last year — when 43,807 transactions were recorded, the increase widens to 13.4 percent. The final tally for April contracts may rise further, as some deals have yet to be reflected depending on balance payment schedules and the timing of confirmed-date registrations.

Market observers say rising apartment rents and a shortage of listings in Seoul have pushed demand toward rowhouses and multi-unit homes, which carry a lower barrier to entry. The shift accelerated after the expansion of land transaction permit zones in October last year: as apartment rental costs climbed, some tenants moved to villas as a more affordable alternative.

Rising demand has pushed prices higher. The jeonse price index for Seoul rowhouses rose 0.44 percent in April from the previous month, according to the Korea Real Estate Board. That was the highest monthly gain since September 2013, when it rose 0.54 percent — a gap of 12 years and seven months.

The cumulative jeonse increase for January through April this year stood at 1.34 percent, the highest for that period since 2011, when it reached 3.73 percent — a 15-year high. Monthly rent climbed even faster: the cumulative wolse increase for Seoul rowhouses from January through April reached 1.60 percent, the highest on record for that period since the relevant statistics were first compiled in July 2015.

Actual costs borne by tenants also rose. The average jeonse deposit for Seoul rowhouses and multi-unit homes from January through April this year was 240.98 million won (about $159,000), up 7.75 million won from 233.23 million won in the same period last year. Average monthly rent rose from 548,000 won to 562,000 won.

As prices continue to climb, more tenants are choosing to stay in their current homes. The share of renewal contracts among Seoul rowhouse and multi-unit deals from January through April this year edged up to 27.25 percent from 26.73 percent in the same period last year.

The rate of tenants exercising their lease renewal rights rose more sharply. Among renewal contracts signed from January through April this year, 32 percent involved use of the contract renewal request right, up 7.2 percentage points from 24.8 percent in the same period last year. The figures suggest a growing number of tenants are using the right — which caps rent increases at 5 percent — to secure an additional two years in their current homes.


rim@heraldcorp.com