Sunday, November 28

“Even if I lowered 50 million won, I wouldn’t go out of the charter”… ‘Jeonse cliff’ due to sharp drop in demand

Chartered Brokers Experienced Jeonse Transaction Index
Under 10 for the first time since December 2008
“Going bearish” vs “Holding your breath”

Hankyoreh Design Team

Recently, a transaction cliff phenomenon is appearing in the apartment charter market in Seoul. This is because the demand for jeonse has decreased due to the use of the right to apply for contract renewal in the loan regulation. There is a difference between the opinion that the Jeonse price is going through the stabilization process and the analysis that it is an unstable intermediate process that leads to a sudden drop in the buying and selling price. According to the Jeonse Transaction Index (based on Seoul) prepared by KB Kookmin Bank on the 14th, it fell to 9.8 in the single digits in October. This is half of what it was last January (18.9). This is the first time since December 2008 (4.3) that this index has fallen below 10. In that this index reflects the psychology of a kind of broker, brokers these days feel that the Seoul jeonse market has reached an ice age comparable to that of the financial crisis. Yoon Seong-yeol, president of the Gangnam-gu branch of the Korea Real Estate Brokers Association, said in a phone call, “In Daechi-dong Mido and Eunma Apartments, the number of rentals increased by about 20%. However, no contracts have been signed except for anti-war sales,” he said. Kim Han-gil, president of Nowon-gu branch, also said, “There is no one looking for it because they say they only offer an increase in the amount of the jeonse loan (deposit). Real estate is in an all-stop state, whether for sale or charter,” he said. They cited loan restrictions as the first factor that caused the transaction cliff. In the case of high-priced jeonse, it is believed that the latest loan regulations as well as the Jeonse loan regulations included in the December 16, 2019 measures have an effect with a time lag. The December 16 measures made it impossible for homeowners with more than 900 million won to receive a loan guarantee when they get Jeonse. A real estate official near Mapo Raemian Prugio said, “The high demand for high-priced jeonse is high for people who want to buy a good house to rent their house. It’s hard to win,” he said.

The use of contract renewal rights in accordance with the enforcement of the new lease law is also considered to be the cause of the decrease in the demand for jeonse. A real estate official in Samseong-dong, Gangnam-gu, said, “There is a charter that has been sold for 1.5 billion won since last April, but it has not been released yet. If you don’t move, there is little movement because it can be in a similar price range.” He said, “The price has risen a lot in the past year since the 3rd Law on Leases, but demand is not supporting it, so it won’t be exhausted at that price.” Reconstruction demand for reconstruction in the Gangnam area, which is a major variable in the increase and decrease of Seoul’s jeonse demand, has also been digested to some extent. Ahn Hyeon-hee, vice chairman of Yongsan-gu, said, “Two or three months ago, there was a lot of demand for people moving from Banpo to Yongsan. A trading cliff leads to a decline in the asking price. Kim Jin-guk, head of the Guro-gu branch, said, “If you pay 500 million won for a 30 pyeong unit, even if you pay up to 450 million, there is no contract. A real estate official near Mapo Raemian Prugio also said, “The recent asking price of 24 pyeong has dropped from 900 million to 950 million won to 850 million to 900 million won, but it cannot be traded.” There is also the view that the decline in asking prices is only a ‘take a breath’ and is difficult to see as a ‘bearing turn’. Park Won-gap, senior real estate expert at KB Kookmin Bank, said, “November can be viewed as a breath-taking aspect since it is the off-season. This means that it is too early to be concerned about market instability only with the current decrease in trading volume. By Jin Myung-seon, staff reporter [email protected]

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