Recovery of Villa Jeonse Prices
Villa jeonse prices have rebounded to levels seen just before the major jeonse fraud scandal in 2022. This recovery is attributed to a growing number of landlords shifting from jeonse to monthly rent contracts, as many continue to avoid jeonse due to its risks. Additionally, the overall decrease in jeonse listings has been driven by a market slump that has halted new villa supplies.
According to the Korea Real Estate Board on the 8th, Seoul’s villa jeonse price index, with March 2025 set at 100, stood at 102.21 in January of last year. This figure is close to the level recorded in December 2022 (102.72), when media reports began highlighting the large-scale jeonse fraud. At that time, a landlord who had leased over 1,000 villas and officetels in the metropolitan area suddenly passed away, leaving hundreds unable to recover their deposits. This incident led to significant social repercussions and intensified the trend of avoiding villa jeonse.
The supply-demand trend index for villa jeonse also rose above 100 in September of last year, reaching 103.6 in January. The higher the index goes above 100, the more it indicates that demand exceeds supply due to a shortage of listings.
This situation is partly due to the cumulative shortage of apartment supply in recent years, compounded by a sharp decline in jeonse listings. Non-apartment construction starts, including villas and officetels, have also dropped significantly. According to an analysis by the Seoul Metropolitan Government using data from the Ministry of Land, Infrastructure and Transport, the number of non-apartment completions in Seoul last year was 5,000 households, a 17 percent decrease from 6,000 households the previous year. The number of apartment jeonse listings in Seoul has decreased by 38.9 percent compared to a year ago.
As the criteria for joining deposit insurance were strengthened, safe villa jeonse listings further decreased. Before the jeonse fraud, individuals could join deposit return guarantee products from institutions like the Korea Housing & Urban Guarantee Corporation (HUG) for amounts up to 150 percent of the officially announced price. However, since May 2023, this standard has been tightened to 126 percent. As the guarantee limit decreased, landlords increasingly converted part of the jeonse to monthly rent to lower the deposit. From the tenant’s perspective, it has become even harder to find jeonse homes where deposits are protected.
The Trend of “Monthly Rentification” of Jeonse
The trend of converting jeonse contracts to monthly rent contracts, known as the “monthly rentification of jeonse,” is rapidly progressing. As existing tenants increasingly use their contract renewal rights, jeonse listings have further dried up. Last year, jeonse transactions in villa leases decreased by 17.3 percent, while monthly rent transactions increased by 16.1 percent. Monthly rent accounted for 60 percent of all lease transactions.
Kim In-man, head of the Real Estate Economic Research Institute, said, “Jeonse demanders like newlyweds and young people coming to the capital have nowhere to go,” adding, “They don’t have enough money to buy a house, and monthly rent is such a burden that they are inevitably pushed into villa jeonse.”
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