As the apartment prices in the three districts of Gangnam (Gangnam, Seocho, and Songpa) have risen, the jeonse rate has fallen to the 30% range. The jeonse rate refers to the ratio of jeonse prices to purchase prices.
On the 23rd, real estate R114 analyzed the average price of 1.57 million apartments (excluding rentals) in 25 districts of Seoul as a sample, and reported that last month the jeonse rate in Seocho District was 37.1%. This means that jeonse prices are about one-third of the purchase prices.
Songpa District recorded 38.4%, and Gangnam District was at 39.1%. Following that, Yongsan District had the fourth lowest at 40.9%. Gangseo (44.2%), Yeongdeungpo (45.6%), Gangdong (46.3%), and Seongdong (46.4%) also had jeonse prices not reaching half of the purchase prices.
The area with the highest jeonse rate in Seoul was Geumcheon District, recorded at 60.9%. Seongbuk and Jungnang Districts both recorded 59.5%. Gangbuk (58.3%) and Gwanak (57.8%) also had jeonse rates exceeding 50%.
The average jeonse rate in Seoul was 45.2%. The jeonse rate in Seoul was in the 70% range in early 2017. However, as housing prices rose, the jeonse rate began to decline, recording in the 50% range in May 2018, and it has been fluctuating around 40 to 50%.
Last month, the jeonse rate dropped to the 45% range, marking the lowest point since January 2017. In particular, as house prices surged in the three districts of Gangnam, the jeonse rate in this area has shown a sharp decline.
Last month, the jeonse rate in Gangnam District decreased by 2.8 percentage points compared to January. During the same period, Songpa District fell by 2.7 percentage points, while Seocho District decreased by 2.4 percentage points.
In the market, there are evaluations that the decline in Seoul's jeonse rate has made 'gap investment'—buying apartments while having jeonse contracts—more difficult.