Average jeonse price sets new high in greater Seoul

Soaring prices for jeonse, a two-year housing lease that requires a lump sum deposit, have been putting a financial burden on tenants despite the government‘s protection measure that extends contract periods by two more years with a price cap, data showed Tuesday.

According to KB Kookmin Bank, the average jeonse price in the greater Seoul area in January exceeded 400 million won ($358,710) for the first time since the bank started to collect relevant data in June 2011.

It took only five months for the average price to reach the 400 million-won mark from the previous threshold of 350 million-won, while it took more than three years for the price to hit the 350 million-won mark.

Some market analysts attributed surging jeonse prices to a supply shortage in the housing rental market as well as the government’s new measure that extends a rental contract for a maximum of four years. A government rule to cap the maximum rent hike at 5 percent for contract renewals appears to have raised jeonse prices as landlords jack up deposits in advance when signing new contracts.

The average jeonse price in Seoul came in at 588.3 million won last month, up 110 million, or 23.1 percent on-year, while Gyeonggi Province, which includes satellite cities such as Bundang and Yongin, saw the price rise by 69.9 million, or 27.2 percent, to 326.4 million won.

By Kim Young-won (wone0102@heraldcorp.com)