Deposit Lease Prices in Seoul Surge

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.

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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.