[Edaily Reporter Kim Ju-hwan ] Experts have analyzed that so-called “survival purchases”—where newlyweds, unable to cope with the shortage of jeonse (lump-sum rental) properties and high monthly rents, are taking out loans to buy homes—are driving up housing prices in the outskirts of Seoul and in the northern part of the city. While ultra-high-end complexes in Gangnam are seeing a downward trend due to urgent sales aimed at avoiding tax burdens, prices in working-class residential areas are being propped up by the severe jeonse shortage, leading to a clear polarization in the market.

Kim In-man, director of the Real Estate Economics Research Institute, appeared on MBC Radio’s “Kim Jong-bae’s Focus” on the 5th to analyze the polarization of Seoul’s real estate market and the reality of the imbalance between housing supply and demand.

Director Kim pointed to the “disappearance of jeonse” and the “skyrocketing monthly rent” as the reasons behind rising home prices in Gangbuk and the Dongdaemun, Seodaemun, Seongbuk, and Nodogang (Nowon, Dobong, Gangbuk) areas. He drew a clear distinction, stating, “During the Moon Jae-in administration, investment demand driven by FOMO (fear of missing out)—with sentiments like, ‘You still haven’t bought a place? You’ll end up penniless overnight’—led the market, but currently, there isn’t much of that anxiety or investment demand.”

He continued, “Even when newlyweds try to find a jeonse property, there are none available, so they look into monthly rentals—only to find that landlords are asking for security deposits of 200 million to 300 million won and monthly rents of 2.5 million to 3.5 million won.” He explained, “As a result, there’s a massive surge in ‘survival purchases,’ where people would rather take out a loan to buy a home than pay those monthly rents.” He pointed out, “If the jeonse and monthly rent market had stabilized, there would have been no reason for prices in the Gangbuk area to rise for such a long time.”

He also offered a pessimistic outlook for the future of the jeonse and monthly rent market. Director Kim stated, “For the jeonse and monthly rent market to stabilize, new housing units must be supplied. However, from 2026 to 2030, the supply of new apartments in Seoul will be limited to around 60,000 units, while relocation demand resulting from urban renewal projects will reach 180,000 units.” “With relocation demand three times greater than new supply, compounded by landlords raising monthly rents due to regulations on owner-occupancy, it will be difficult to calm the market in the short term without extraordinary government measures,” he emphasized.

Meanwhile, regarding President Lee Jae-myung’s remark that “housing prices in major areas of Seoul are falling at an astonishing rate,” Director Kim interpreted this as a localized phenomenon in the Gangnam area. He said, “A 61-pyeong apartment in Apgujeong, which traded for 12.8 billion won last December, has recently been sold in the 9.2 billion to 9.3 billion won range—a drop of about 3.5 billion won (-25%) in just one year—so the term ‘sharp decline’ is accurate,” “Since prices had doubled from the 6 billion won range three years ago before undergoing a correction, depending on the perspective, one might view this as a crash or still consider it expensive,” he added.

In particular, he analyzed that the cause of the downturn in the Gangnam area is not interest rates but the “tax burden.” Director Kim explained, “Rather than putting their properties on the market because they don’t expect prices to rise further, this is a rational choice in light of the tax reform plan.” He continued, “Property taxes alone amount to tens of millions of won, and since the special deduction for long-term ownership (80%) is set to be reduced to a 1 billion won cap starting in 2029, long-term owners who find it difficult to bear the tax burden are rushing to sell.”

He added, “Although the government has provided a grace period until 2027, those hoping to sell will likely finalize their transactions by the first half of next year,” noting, “There is a precedent from the Roh Moo-hyun administration where prices stabilized briefly for a year before rising again. It is too early to conclude that the market has stabilized based solely on short-term effects; true ‘stability’ can only be considered if it lasts at least three to five years.”

He also pointed out the contradictions created by loan regulations. Director Kim noted, “In Gangnam, where loan limits have been reduced to around 200 million won, purchases are made using personal capital or gifts, so the impact of high interest rates is minimal.” He emphasized, “On the contrary, the impact is much greater on newlyweds buying homes priced at 1.5 billion won or less with a 600 million won loan, as well as genuine homebuyers in the outskirts of the Seoul metropolitan area and in regional areas, who are facing a heavier interest burden amid stagnant housing prices.”

Finally, Director Kim suggested, “It is difficult for the public to feel the impact at the land compensation or permitting stages,” adding, “Just as was done during the second phase of the New Town projects, the government should pool public housing units and hold joint sales events—such as large-scale ‘housing lottery festivals’—so that newlyweds can stop making reckless purchases and wait for the housing lottery.”