With middle ground of buying and renting fast shrinking, gap between housing haves and have-nots grows, studies show
Jeonse, a system that allows people to rent homes with a lump-sum deposit and no monthly payments, was once the mainstay of home leasing in South Korea. Offering more stability than monthly rentals and a less costly alternative to home ownership, this unique system served as a middle ground between renting and buying.
However, with a sharp decline in jeonse contracts in recent years, Koreans, especially those in younger generations, now face a growing divide between the haves and have-nots. That is, those who can afford to buy homes, albeit on hefty loans, or those who can’t and must settle for “wolse,” monthly rentals.
According to a report published by local property technology startup Real Estate Planet on Thursday, monthly rentals accounted for 54.4 percent of all home lease transactions for multi-family housing in Seoul last year. Muilt-family housing refers to low-rise residential buildings with multiple homes, but not apartment complexes. Monthly rentals rose 12.4 percent year-on-year, while jeonse deals decreased by the same percentage.
"As the real estate market overheats, the gap continues to widen between financially capable people moving from jeonse to homeownership and those who can’t and switch to monthly rentals, further deepening polarization," said Ha Jun-kyung, an economics professor at Hanyang University.
The average price of apartments in Seoul reached a record high of 1.38 billion won ($942,000) in January, which surpassed the previous peak of 1.37 billion won recorded in May 2022, industry data showed. Seoul apartment prices are widely used as a benchmark of housing prices in South Korea.
The decline in jeonse deals has been a steady issue, with various factors, including interest rate fluctuations, contributing to it. But recently, concerns about jeonse fraud are also cited as a main cause for the decline.
According to the National Police Agency, the total financial losses from fraud cases involving the swindling of renters' jeonse down payments reached 2.28 trillion won between 2022 and 2024, with 14,907 victims filing lawsuits during that period.
Another set of data published Thursday by the Statistics Research Institute, showed a shift in the housing status of Koreans in their early 30s (aged 31-35), with jeonse contracts disappearing.
While around 17 percent of those currently aged 51 to 54 were living in monthly rentals in their early 30s, 21.3 percent of those aged 35 to 39 in 2025 are in the same situation.
A similar pattern was observed in terms of homeownership, though the change was smaller. While 48.1 percent of Koreans aged 51-54 in 2025 owned a home in their early 30s, the corresponding figure for those aged 35-39 has risen to 49 percent.
cjh@heraldcorp.com
