Updated January. 16, 2014 09:53
A would-be-bride who plans to get married in October this year is quarreling with her would-be husband over house rent. Due to severe scarcity of Jeonse (a unique Korean house rental system in which a tenant pays lump-sum deposit to landlord instead of monthly rent), she wants to sign contract when they find an affordable home. But his boyfriend wants to wait until autumn saying prices may stabilize by then and because he doesn`t want to leave the house vacant for four to five months. She said, "I want to rent a house in Bundang since my parents live there, but jeonse prices have gone up high in this area."
Who`s right? Regarding the losses of having to leave the house vacant, the man appears to be right, at least in a statistical point of view.
○ Jeonse prices gets higher in autumn than in spring
The Dong-A Ilbo asked real estate research firm Real Today to measure the fluctuation rate of apartment jeonse prices over the past 10 years (2004-2013). According to the results, it was found that it was profitable to get jeonse in spring than in autumn if one has to pick between the two high-demand seasons.
According to analysis based on Korea Appraisal Board`s data, average apartment jeonse prices in April and May rose 0.95 percent, while in September and October they rose 1.42 percent. The figures were an average of the past 10 years based on month-on-month growth rates.
The gap was far bigger in Seoul. The jeonse price increase rate in April and May was 0.62 percent, and 1.83 percent in September and October. Assuming that jeonse price is 300 million won (282,353 U.S. dollars), it is 3.63 million won (3,416 dollars) more expensive in autumn than in spring.
Last year in particular, when jeonse prices sharply rose, the gap was even wider in popular apartment complexes. The price for Jamsil Els apartment (84m²) in southern Seoul was 520 million won (489,412 dollars) in April and May, similar to that of the beginning of the year, which skyrocketed to 615 million won (578,824 dollars) in September and 635 million won (597,647 dollars) in October, maintaining that level until the year end. In month terms, December had the lowest price fluctuation(0.08 percent) nationwide since it is off-season.
Yang Ji-young, head of research advisory team at Real Today, said, "Considering opportunity costs, it might not be a loss to rent a house a few months ahead if it is a popular area."
○ Cohabitation before marriage?
Jeonse prices are higher in autumn than in spring partly due to marriage demand. More soon-to-be married couples, who account for a considerable share of jeonse demand, tend to get married more in autumn than in spring. According to Statistics Korea, October saw 38,340 marriages in 2000-2012, followed by November with 37,848.
A Statistics Korea official said, "Since many women who are beyond marriageable age want to get married before the year ends, an increasing number of them are getting married in autumn."
Demand for houses in preferred school districts also had impact. A source at a real estate agency in Mok-dong in northern Seoul said, "People tend to look for houses in autumn ahead of new semester in March, which leads to concentrated jeonse demand in autumn period.
Yet there are also prospects that the jeonse price gap could narrow since jeonse prices have been on the rise for the 72th week.