Seoul's apartment lease market is experiencing its most severe supply-demand imbalance in approximately five and a half years [1].
The shortage creates a precarious environment for tenants as dwindling availability typically precedes significant rent hikes. This imbalance affects both the traditional Jeonse system, where tenants provide a large lump-sum deposit, and standard monthly rental agreements.
Data from the second week of June 2024 shows the Jeonse supply-demand index reached 122.5 [1]. This represents the lowest supply level since the third week of February 2021, when the index stood at 122.8 [1]. Reporter Hwangbo Yeon of YTN said the index operates on a scale where 100 is the baseline, and figures closer to 200 indicate that there are more people seeking rentals than there are landlords offering them [1].
The monthly-rent market is seeing similar pressure. The monthly-rent supply-demand index rose to 114.8, an increase of 5.1 points compared to the previous month [1]. This trend suggests that the scarcity is not limited to one specific lease type but is a systemic issue across the city's residential sectors.
Market analysts attribute the crisis to a shortage of new rental units entering the market. This lack of new inventory is compounded by an increase in contract renewals by existing tenants, which keeps current apartments off the market. Because supply cannot keep pace with demand, rental prices have risen significantly compared to the previous year [1].
An anchor for YTN News said that because supply has failed to support demand, lease prices have risen sharply over the last year [1]. The current trajectory suggests that further price increases are likely as the gap between available units and prospective tenants continues to widen.
“Seoul's apartment lease market is experiencing its most severe supply-demand imbalance in approximately five and a half years.”
The convergence of a low Jeonse index and a rising monthly-rent index indicates a broad contraction in Seoul's rental availability. When both lease models tighten simultaneously, tenants have fewer alternatives to pivot to if prices spike. This supply crunch, driven by both low construction of new units and high retention of existing ones, likely puts upward pressure on the cost of living for Seoul's urban population.
