High-end wolse leases surge as jeonse supply shrinks; nearly half of all monthly rents top 1 million won; falling move-in volumes point to further increases

A resident browses property listings at a real estate agency in central Seoul. [Herald DB]
A resident browses property listings at a real estate agency in central Seoul. [Herald DB]

Seoul's rental market is rapidly shifting toward monthly wolse leases as a shortage of jeonse — the lump-sum deposit rental system — deepens. Nearly half of all new wolse contracts for Seoul apartments now carry monthly rents of 1 million won ($724) or more, and the share of contracts at 3 million won or above is approaching double digits.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, 26,852 new wolse contracts were signed for Seoul apartments from Jan. 1 through June 4 this year. Of those, 13,225 — or 49.2 percent — carried monthly rents of at least 1 million won. That compares with 45.4 percent, or 13,448 out of 29,579 contracts, during the same period last year, a rise of 3.8 percentage points.

Contracts at 3 million won or more also climbed. This year, 2,541 Seoul apartment wolse deals — 9.4 percent of the total — fell into that high-end bracket, up 2.1 percentage points from 7.3 percent, or 2,188 contracts, a year earlier.

The shift from jeonse to wolse is accelerating in Seoul's lease market, and monthly rents are rising steeply alongside it. Stricter owner-occupancy requirements have reduced the supply of jeonse listings, pushing more tenants toward wolse. Lingering fallout from jeonse fraud has reinforced the trend, with both landlords and tenants increasingly preferring monthly arrangements. The Ministry of Land, Infrastructure and Transport's April housing statistics show that wolse accounted for 70 percent of Seoul rental transactions from January through April, up 6.4 percentage points from 63.6 percent in the same period last year. Rents are also climbing: the Korea Real Estate Board put the average monthly rent for Seoul housing at 1,246,000 won in April, up 7.8 percent from 1,155,000 won a year earlier.

High-end wolse deals have been particularly common in Seoul's outer districts, where they are tracking a broader rise in home prices. On May 9, an 84-square-meter unit on the eighth floor of Hanwha Forena Mia in Mia-dong, Gangbuk-gu, was leased on a wolse contract with a 50 million won ($36,200) deposit and a monthly rent of 3.1 million won ($2,240).

In March, a 25th-floor 84-square-meter unit at Nowon Lotte Castle Signature in Sanggye-dong, Nowon-gu, was leased for a 150 million won ($108,600) deposit and 3 million won ($2,170) a month. That same month, an 18th-floor 84-square-meter unit at e-Pyeonhansesang Seoul National University Entrance 2 complex in Bongcheon-dong, Gwanak-gu, was rented for a 10 million won ($7,240) deposit and 3 million won a month.

Experts expect upward pressure on wolse to persist, given a scheduled drop in new apartment move-in volumes this year.

According to Real Estate 114, the number of apartments set to be handed over nationwide this year stands at 175,370 units, down 62,707 units, or 26.3 percent, from 238,077 last year. Seoul is expected to see the steepest decline of any region, with move-in volumes projected to fall 41.7 percent — from 32,370 units last year to 18,880 this year.

"Jeonse supply has until now acted as a brake on wolse price increases, but as jeonse listings shrink, that restraining effect has weakened," said Yun Ji-hae, head of the research lab at Real Estate 114. "A shortage of new supply and growing demand for newly built wolse units will keep monthly rents rising."

As instability in the lease market has intensified, the government recently announced a plan to expand the supply of non-apartment rental housing. The centerpiece is the provision of 66,000 purchased rental units over the next two years in regulated zones across Seoul and Gyeonggi Province.


lucky@heraldcorp.com