Park takes on jeonse prices

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Park takes on jeonse prices

Published: 20 Aug. 2013, 21:13

An overview of Gangnam, southern Seoul, including Tower Palace, which is considered the most expensive apartment complex in the country. [NEWS1]

For two days running, President Park Geun-hye has ordered her ministers to combat the affordable housing problem as the asking price for houses and apartments lent on long-term deposits, or jeonse, continues to rise.

“The most urgent issue for the working class is the growing difficulty of finding affordable housing,” Park said in a cabinet meeting Monday. “There should be a reasonable system that makes housing prices predictable for both landlords and tenants.”

At a meeting of senior presidential secretaries yesterday Park said, “The focus of housing policy in the second half of the year should be on resolving the jeonse and wolse crisis.” Wolse refers to housing paid for monthly, with or without deposits.

“Supplying more affordable public rental housing by putting unsold homes on lease contracts would help,” Park added.

The government and ruling Saenuri Party yesterday held a meeting to discuss measures to deal with the housing issue. Suh Seoung-hwan, minister of land, infrastructure and transport, Hyun Oh-seok, minister of strategy and finance and Shin Je-yoon, chairman of the Financial Services Commission attended the meeting.

There are growing complaints among people from all walks of life about the short supply and high price of jeonse apartments and houses, and the rising trend of landlords asking for monthly rent instead, which Koreans don’t prefer.

Landlords are turning away from jeonse deposits because they earn so little interest at the banks, and monthly rent payments are more lucrative. At the same time, more people are forced to rent instead of buy because the real estate market has been in the doldrums for years, and owners don’t want to sell at current low prices, especially if they have to sell at a loss.

According to the Ministry of Land, Infrastructure and Transport yesterday, rental transactions including jeonse and monthly rent dropped 0.7 percent across the country in July. But the jeonse prices keep rising.

Finance Minister and Deputy Prime Minister for the Economy Hyun Oh-seok, right, getting ready to discuss solutions to high jeonse prices and the rise of monthly rentals with lawmakers from the ruling Saenuri Party at the National Assembly in Yeouido, yesterday. [NEWSIS]

In Banpo-dong in Seocho District, one of the three most expensive areas to live in Seoul, an 84.96 square-meter (914.5 square-foot) apartment’s jeonse price climbed from 299 million won ($267,007) in June to 355 million won last month.

In northern areas of the capital city, popular apartment complexes saw prices go up by around 10 million won during the same period, the ministry said.

The country’s real estate market has been depressed since the former Roh Moo-hyun administration applied several restrictions to curb speculation.

Land Ministry data also showed that the number of houses on monthly contracts stood at 325,830 in July, accounting for 38.9 percent of the nation’s total housing transactions. The percentage is the highest since 2011.

For apartments, monthly contracts surpassed 30 percent for the first time this year.

At yesterday’s meeting, the lawmakers and government officials agreed to work on diverting demand for jeonse into home purchases and expanding the supply of public rental housings.

The financial authority will look for tax incentives to help people living in apartments on jeonse or monthly rent payments. A final policy package will be announced next Wednesday.

BY song su-hyun [[email protected]]