Seoul’s Rental Market Tightens: What’s Driving Up Jeon Prices?
Seoul’s rental market is bracing for price increases following the Lunar New Year holiday, fueled by a persistent shortage of available properties. Restrictions on gap investment (buying a property with an existing tenant and using the tenant’s deposit to finance the purchase) across Seoul, implemented as part of real estate measures in October 2025, have significantly limited the supply of rental units.
The Shrinking Supply of Jeon Rentals
The traditional jeon rental system – a large, lump-sum deposit in lieu of monthly rent – is particularly affected. According to data from the real estate platform Asil, the number of apartments available for jeon in Seoul as of February 13, 2026, was 20,422, a roughly 33% decrease compared to the same period last year (30,652).
Experts predict this trend will continue. “Seoul is facing a shortage of new housing completions, which directly impacts the availability of jeon rentals,” explains Ko Jong-wan, head of the Korea Asset Management Research Institute. “Combined with rising home prices, this is pushing up jeon prices.”
Beyond Apartments: Villas and Multi-Family Homes Similarly Observe Increases
The upward pressure isn’t limited to apartments. Rental prices for villas and other non-apartment properties are also expected to rise. This follows the trend seen in the apartment market.
A survey of 20 real estate experts conducted by News1 revealed that 19 anticipate an increase in Seoul apartment jeon prices, with the remaining one predicting they will remain stable.
Government Policies and Their Impact
Recent government signals regarding stricter regulations for multi-homeowners are also contributing to the market dynamics. President Lee Jae-myung hinted in January 2026 at the potential reinstatement of higher taxes on capital gains for multi-homeowners and increased holding taxes.
Kim In-man, head of Kim In-man Real Estate Research Institute, notes, “Strengthening regulations on multi-homeowners and emphasizing owner-occupancy create it harder to stabilize the rental market. This pressure extends to both apartment and non-apartment rental markets.”
Regional Variations: Gyeonggi, Incheon and Beyond
The impact isn’t confined to Seoul. Experts also foresee price increases in Gyeonggi and Incheon provinces, with 18 out of 20 experts surveyed predicting a rise in jeon prices in those areas. A majority (75%) of experts anticipate rising jeon prices in other regional cities as well.
Song Seung-hyun, CEO of City & Economy, suggests that in regional areas, a combination of limited supply in key cities and weakening buyer sentiment is driving up rental costs.
However, the outlook for non-apartment rentals varies by region. While Seoul is expected to see significant increases (80% of experts predict rises), Gyeonggi and Incheon are more balanced, with 50% anticipating price increases. In contrast, a majority (40%) of experts predict a decline in jeon prices for non-apartment properties in other regions.
What’s Driving the Regional Differences?
Song Seung-hyun explains, “Seoul is experiencing an influx of demand as people seek alternatives to expensive homeownership. Gyeonggi and Incheon are maintaining a relatively stable supply and demand balance. However, in other regions, a preference for apartments and a surplus of unsold properties are contributing to a decline in the value of non-apartment rentals.”
Frequently Asked Questions
Q: What is gap investment?
A: Gap investment involves purchasing a property that already has a tenant and using the tenant’s jeon deposit to help finance the purchase.
Q: What is jeon?
A: Jeon is a traditional Korean rental system where tenants pay a large, lump-sum deposit instead of monthly rent.
Q: Why are jeon prices rising?
A: Rising home prices, limited housing supply, and government regulations are all contributing to the increase in jeon prices.
Q: Will these trends continue?
A: Experts predict that the shortage of rental properties and government policies will likely continue to put upward pressure on rental prices in the near future.
Pro Tip: If you’re considering renting in Seoul, start your search well in advance and be prepared to act quickly when you find a suitable property.
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