More House Owners than Tenants

Prices of apartment rent in Seoul dropped to less than half of the sale prices for the first time in five and a half years.

This is because a drop in rent prices is bigger than a drop in sale prices in the midst of the real estate market slump. Under the current trend, it is not easy for apartment owners to find those who wish to rent a house.

According to a survey on a national house price trend conducted by Kookmin Bank on Tuesday, apartment rent in Seoul recorded only 49.7 percent of the sale prices in June, a 0.4 percentage point decrease from May.

It is the first time that the rate fell below 50 percent since December 1998 when it recorded 47.9 percent.

The rate was in a 60 percent level after 2000, and dropped to 58.7 percent in September 2002 and maintained a 50 percent level until this May.

The average apartment rent across the nation was 60.4 percent of the sale prices as of the end of June.

The Kookmin Bank’s survey showed the biggest drop in apartment rent in Seoul in June, falling by 0.9 percent from the previous month.

It is 4.5 times larger than the sale price drop in Seoul, which stood at 0.2 percent for the same period of time. The drop in rent prices was greater in the Gangnam area (south of Han River) with one percent, compared to the Gangbuk area (north of Han River) with 0.7 percent.

Real estate brokers say that a 1245-square-foot, or 35 pyong, apartment which was sold at 280 million won is now sold at between 200 million to 220 million won.

“Since the beginning of the year, sale prices and rent prices have been influencing each other in reducing house prices,” said Chief Researcher Jang Seong-soo at the Korea Housing Institute. “Coupled with the supply increase in the metropolitan area and psychological factors caused by economic recession, the trend will continue for some time.”

In-Jik Cho cij1999@donga.com