Apartments in the metropolitan area are difficult to find tenants despite a sharp decrease in supply.
(Seoul = Yonhap Infomax) Reporter Seungpyo Nam = The number of cases of not being able to find tenants for new apartments about to move in has increased, attracting attention. This is because it is inconsistent with the industry analysis that rental prices are rising due to a lack of supply. The possibility was raised that this was not a shortage of jeonse supply, but a secondary phenomenon due to the increase in pre-sale prices.
The Housing Industry Research Institute revealed in the April apartment occupancy rate data released on the 10th that the share of unsafe tenants among the reasons for non-occupancy is increasing.
The proportion of reasons for non-occupancy due to not securing a tenant increased from 14.9% in January to 16.1% in February, 23.6% in March, and 33.9% in April.
It wasn’t just the states that couldn’t find tenants.
In the metropolitan area, the occupancy rate in the Gyeonggi and Incheon areas excluding Seoul fell from 78.3% in March to 73.3%, and the number of occupancy units during the same period fell by more than half from 16,227 households to 6,958 households.
Reasons for not moving into a flat in April[출처: 주택산업연구원]
If the increase in rental prices was due to a shortage of supply, the occupancy rate should have risen and the proportion of unsecured tenants not in tenure should have fallen.
According to the Korea Real Estate Board’s weekly trend, the rental price of apartments across the country has been rising for 42 consecutive weeks since the third week of July last year. This is also the case for KB Real Estate, which publishes other weekly trends, and has been rising continuously since the second week of August last year.
Regarding this, some have interpreted that landlords are trying to reflect the lack of jeonse supply due to the lack of occupancy and the fact that the period of jeonse residency has actually been extended to four years due to the enforcement of the Lease Act by raising prices.
Considering that the number of cases of lack of occupancy due to failure to find tenants is increasing, the interpretation that the lack of supply of jeonse is causing the increase in prices has lost force.
The recent surge in pre-sale prices has been pointed to as the cause of the new increase in rental prices.
Regarding the decline in the occupancy rate of apartments in the metropolitan area, the Joosan Research Institute explained that despite the decrease in size, the number of occupancies appears to have decreased as demand fell as pre-sale prices became more expensive than selling prices, especially on the outskirts of Incheon and Gyeonggi-do.
The interpretation is that the increased pre-sale price is reflected in the rental price, and that the increase in the rental price exceeds the range that consumers could afford, leading to a reduction in effective demand.
A similar interpretation was presented for local markets.
Regarding the decrease in the occupancy rate in Daegu and Busan, the Joosan Research Institute suggested that although an increase in bank loan interest rates is expected, rental prices for apartments in popular areas in Daegu and Busan have recently shown a continuous upward trend , leading to a wait-and-see attitude among renters, leading to a decrease in the occupancy rate.
In a normal market, when jeonse prices show an upward trend, jeonse buyers rush to move in. This is to avoid the burden of further progress.
However, the fact that those who insist on jeonse are taking a wait-and-see approach means that the current rise in prices is not normal or that the increase in jeonse prices has exceeded the acceptable limit. In addition, concerns about an increase in interest rates are also a factor that makes it difficult to accept price increases through loans.
The Joosan Research Institute said, “As expectations for a cut in the base interest rate diminish, interest rates on home loans from banks have shown an upward trend again. Due to the prolonged high interest rate trend and the increasing interest burden on consumers , the factor of not securing a tenant is expected to continue to rise for now.”
spnam@yna.co.kr
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This article was published at 13:31 on the Infomax financial information terminal.
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