In the new rental transactions across the country, the proportion of monthly rent has exceeded 60% for the first time. In the provinces, the proportion of monthly rent for non-apartment types such as multi-family and multi-unit housing has surpassed 80%.
According to the 'February housing statistics' announced by the Ministry of Land, Infrastructure and Transport on the 1st, the proportion of monthly rent (including secured monthly rent and semi-monthly rent) in new rental transactions across the country from January to February this year was recorded at 61.4%. This is the first time that the proportion of monthly rent has exceeded 60%.
The proportion of monthly rent in new rental transactions, based on January to February, has consistently increased from 41.7% in 2021 to 47.1% in 2022, 55.2% in 2023, and 57.5% last year.
The shift to monthly rent is progressing more rapidly in the provinces than in the metropolitan area. The proportion of monthly rent in the metropolitan area is 60.2%, increasing by 3.1 percentage points over the past year, while the provinces recorded a rise of 5.4 percentage points to 63.5%. In Seoul, the proportion of monthly rent is 65.2%.
The increase in the proportion of monthly rent for non-apartment types such as villas is sharper compared to apartments. The nationwide proportion of monthly rent for apartments was 44.2% from January to February this year, which is a 2 percentage point increase over the past year. In Seoul, it is 43.8%, while in the provinces, it is 45.4%.
During the same period, the proportion of monthly rent for non-apartments was 76.3%, an increase of 5.6 percentage points compared to the previous year. The monthly rent proportion for non-apartments in the provinces was the highest at 82.9%, followed by Seoul at 76.1% and the metropolitan area at 73.2%.
The acceleration of the shift to monthly rent can be attributed to a decline in the demand for long-term leases for villas following the rental fraud incidents. Additionally, as the real estate market in the provinces remains stagnant and interest rates are lowered, it appears that an increasing number of landlords are switching to monthly rent in order to enhance their revenue.
The burden of monthly rent on tenants is increasing. As of January, the conversion rate of long-term leases to monthly rent in the metropolitan area is 5.9%, while in the provinces it is 6.9%, indicating a rising trend. The conversion rate refers to the ratio used to calculate how much monthly rent will be charged when converting the security deposit of a long-term lease into monthly rent.