Rental Apartment Prices Still Rising

Mr. Kim, an office worker, visited, in vain, quite a few real estate agents around the Poonglim I-one Apartment Complex in Wolgye-dong, Nowon-gu, Seoul to rent a house on September 15.

He thought the house prices would go down sooner or later as the government announced a policy to control the price increases two days ago.

When Mr. Kim visited the agents again on September 29, however, the price of a 31-Pyeong house (1 Pyeong equals about 3.3 square meters) on deposit rose to 175 million won, up 30 million won from 147.5 million 2 weeks ago.

Despite the government’s policy to stabilize the deposit-based housing prices, the upward trend of the prices does not show any sign of stopping, especially for small houses in the northern area of Seoul. The trend is far from the government’s forecast that the recent increase in prices was seasonal and it will stabilize in the next month.

The prices of rental houses on deposit in the Northern Seoul between September 23 and 29 jumped 0.42 percent from last week – an increase of 1.6 to 2 times higher than that of the Southern Seoul (0.26 percent), Western Seoul (0.22 percent) and the downtown (0.22 percent). Also, the increase rate is higher than 0.39 percent, the rate when the government announced the housing policy between September 9 and 15. It is even six times higher than from July 29 to August 4 (0.07 percent).

As short supply is viewed as the main cause of the skyrocketing housing prices in the Northern Seoul, the price hikes are expected to continue.

According to Real Estate Agent 114, a real estate consultant, the number of apartments put up for sale in the area has been 8,417 for the last 9 months of this year. The figure is a 37 percent decrease from 13,338 from the same period of last year. The total supply of this year in the area is projected to be 10,500, down 39 percent from the last year’s 17,281.

Experts warn that the supply will also lack in other regions including the Southern Seoul, Gyeonggi and Incheon as the government’s policy to control the demand for housing will lead to short supply.

Indeed, Ministry of Construction & Transportation said that the number of newly constructed housing in the suburbs for the last eight months of this year was 86,039, a 16.1 percent drop from last year.

Chung Eui-cheol, professor of the Department of Consumer Science and Housing of Konkuk University pointed, “The recent price hikes in the deposit-based rental housing was not caused by seasonal factors only. Government should increase the supply to reduce the price.”

sukim@donga.com bae2150@donga.com