🏠 Why Seoul’s Jeonse Crunch Won’t Ease — Record-Low Housing Starts, and the Government’s 90,000 ‘Non-Apartment’ Bet

The core reason Seoul’s jeonse (lump-sum lease deposit) crunch refuses to ease is, ultimately, that there simply aren’t enough homes. Rather than the rising deposits themselves, look at the supply shortage behind them. Last month Seoul’s apartment jeonse price index rose 1.15% month-on-month — the sharpest gain in 11 years and 1 month. Behind it lies a structural supply cliff: housing starts in Seoul over January–April this year fell to their lowest since records began. The government has reached for “non-apartment” housing, which can be supplied in the short term, as its answer. 🏗️

TL;DR

Last month Seoul’s apartment jeonse price index (monthly) rose 1.15%, the biggest jump since April 2015 — 11 years and 1 month. On a weekly basis it rose 0.35% in the fourth week of June, the highest in 12 years and 8 months.
The root cause is a structural supply shortage. According to the Ministry of Land, Infrastructure and Transport, Seoul apartment starts in January–April this year totaled just 4,564 units — the lowest for that period since records began in 2011.
The government is responding by expanding non-apartment supply in the greater Seoul area (90,000 public purchase-and-lease units, eased rules for urban-living housing, and more). The Korea Research Institute for Construction Policy projects Seoul jeonse prices will climb 5.0% this year.

📈 How Fast Is Seoul Jeonse Rising Right Now?

Seoul jeonse prices are climbing at their steepest pace in roughly 12 years on both monthly and weekly gauges. Per Korea Real Estate Board data, last month the average jeonse price index for Seoul housing overall (apartments, row houses, detached homes) rose 0.91% month-on-month. That is the highest rate since October 2013 (1.04%) — the aftermath of the 2008 global financial crisis, when a jeonse shortage crisis erupted — a span of 12 years and 7 months.

Looking at apartments alone, the increase is even larger. Last month Seoul’s apartment jeonse price index rose 1.15%, the biggest jump since April 2015 (1.25%) — 11 years and 1 month. The weekly trend tells the same story. In the fourth week of June (as of the 22nd), Seoul apartment jeonse prices rose 0.35% in a single week, the highest since the third week of October 2013 (0.35%) — 12 years and 8 months.

The outlook is no gentler. The Korea Research Institute for Construction Policy expects Seoul jeonse prices to rise 5.0% this year — a level similar to 2021 (5.1%), when deposits spiked in the wake of the two lease laws (the contract-renewal right and the rent cap).

🏗️ Why Is It Rising Like This? — A Structural Shortage of Starts and Move-Ins

The root cause of the jeonse crunch is that new housing supply has been shrinking for years. From 2020 to 2024, project-financing distress, high interest rates, and a construction-cost surge tied to the Russia-Ukraine war combined to cut housing starts, which then fed through — with a lag — into a shortage of completed, move-in-ready homes.

The numbers bear this out. According to the Ministry of Land, Infrastructure and Transport, Seoul apartment starts in January–April this year totaled 4,564 units — the lowest for that period since the statistic began in 2011. When starts fall now, move-in volume falls two to three years later, so the shortage of jeonse listings is likely to persist structurally for some time.

Other factors are pulling supply and demand out of alignment. This year, multiple-home owners have been selling ahead of the expiry of the capital-gains-tax surcharge grace period, and relocation demand from redevelopment and reconstruction projects has piled on, leaving rental listings scarce. At his one-year-anniversary press conference on June 8, President Lee Jae-myung diagnosed the shortage of jeonse supply as a consequence of falling supply, saying “over the three years from 2022 to 2024, supply shrank sharply,” and argued that breaking the speculative cycle and increasing supply is the solution.

🏘️ What Is the Government’s Answer? — Expanding ‘Non-Apartment’ Supply in Greater Seoul

The government has reached for non-apartment housing, which can be supplied quickly, as its card against the jeonse crunch. Apartments take three to five years from start to move-in, but non-apartments such as villas, urban-living housing, and officetels can usually be built in six months to a year, making them well suited to a short-term supply boost.

The government rolled out measures on two occasions last month. First, by next year it will supply 90,000 purchase-and-lease homes in the greater Seoul area led by public bodies such as the Korea Land and Housing Corporation (LH), concentrating 66,000 of them in regulated zones including Seoul and Gyeonggi. To spur private supply, it will also temporarily ease rules on urban-living housing — lowering the standards for unit counts, floors, and parking — with a target of 41,000 units by next year and 110,000 units in total by 2030.

On top of that, it will convert vacant downtown retail space and offices into studios and officetels to supply more than 33,000 units by 2030, and temporarily allow knowledge-industry centers to convert to officetels, pursuing non-residential remodeling in parallel.

🔎 Can This Plan Tame the Jeonse Crunch?

Experts acknowledge the supply-signal effect but point to two walls: “speed” and “preference.” Although the government laid out supply plans in last year’s Sept. 7 measures and this year’s Jan. 29 measures, even at an accelerated pace starts are unlikely before next year at the earliest, so the assessment is that the immediate shortage will be hard to resolve.

Kim In-man, head of the Kim In-man Real Estate Economy Research Institute, said the country needs to move faster on non-apartment supply that can substitute for jeonse and monthly rentals. Kwon Dae-jung, a chair professor at Hansung University, stressed that instability in the rental market won’t be easily resolved amid a listings shortage, and that a fine-grained policy managing both prices and the rental market at once is needed. Yang Ji-young, an expert adviser at Shinhan Bank’s Premier Pathfinder, praised non-apartments as a “housing ladder” for young professionals and newlyweds, while noting that overcoming the preference for apartments and the aversion to non-apartments requires improvements in living conditions.

The Bottom Line

Seoul’s jeonse crunch right now is less a short-term spike than the surfacing of a supply cliff that has built up over years. Jeonse prices logged their highest gains in roughly 12 years on both monthly and weekly measures, and at the root sits record-low supply — just 4,564 starts in January–April this year. The government’s non-apartment card points in the right direction in that it can send a supply signal faster than apartments, but whether it translates into actual housing stability is a separate question.

Three points to watch in the second half: first, how concretely the government’s comprehensive real-estate measures, flagged for late July, spell out supply speed and execution; second, how much real end-user demand actually follows for non-apartments; and third, how the direction of the base rate affects jeonse and purchase demand. Since it takes time before new supply is felt, it is worth watching the data and the policy together.

※ This article is for informational purposes only and is not investment advice.

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