Seoul’s average apartment monthly rent has surpassed 1.6 million won (approximately $1,200) for the first time ever. With jeonse listings rapidly dwindling, tenants are being pushed into monthly rent arrangements, and this demand is in turn driving monthly rent prices higher—a self-reinforcing cycle that appears to be becoming entrenched. In Daegu, an unusual divergence has emerged where sale prices are falling while both jeonse and monthly rent prices are rising simultaneously, signaling that the supply foundation of the broader rental market is being shaken.

According to the Korea Real Estate Board’s monthly housing price trend survey, Seoul’s average apartment monthly rent in July was recorded at 1.62 million won (approximately $1,200). This represents a 1.7% increase from June’s 1.592 million won (approximately $1,200), marking the first time the figure has breached the 1.6 million won threshold since the statistics began. Seoul’s average apartment monthly rent crossed 1.4 million won (approximately $1,000) in April last year, then surpassed 1.5 million won (approximately $1,100) in January this year, and has now exceeded 1.6 million won in just six months.

The pace of increase is also steep. Seoul apartment monthly rent prices rose 1.15% in June, followed by a 1.22% increase in July. The cumulative increase this year has reached 5.73%. As monthly rent demand surges, the supply-demand imbalance in the rental market is deepening. Seoul’s apartment monthly rent supply-demand index rose from 119.6 in June to 120.7 in July, while the jeonse supply-demand index also climbed from 126.2 to 127.5 over the same period. A supply-demand index above 100 indicates that demand exceeds supply.

The current jeonse supply-demand situation is elevated even compared to periods of extreme rental market crises in the past. The all-time high for Seoul’s apartment jeonse supply-demand index was 133.5 in December 2020, when the rental crisis peaked, and the monthly rent supply-demand index also reached 125.5 at that time.

Monthly Rent Becomes the Mainstream of the Rental Market

The speed at which monthly rent is becoming the center of the rental market is also accelerating. According to housing statistics from South Korea’s Ministry of Land, Infrastructure and Transport, monthly rent accounted for 68.3% of all nationwide housing lease transactions from January through July this year. This figure, which includes deposit-based monthly rent and semi-jeonse arrangements, represents a 6.5 percentage point increase from the same period last year. In Seoul, the monthly rent share reached 69.7%, meaning roughly seven out of every ten lease contracts were monthly rent arrangements.

The monthly rent share has been trending upward each year. On a cumulative January-July basis, the nationwide monthly rent share rose steadily from 51.5% in 2022 to 55.0% in 2023, 57.3% in 2024, and 61.8% in 2025. This year it has surged to 68.3%, an expansion of 16.8 percentage points compared to 2022. The center of gravity in the rental market, once dominated by jeonse, is rapidly shifting toward monthly rent.

Experts assess that if the reduction in rental supply due to owner-occupancy conversions coincides with the pass-through of tax burdens onto rents, the phenomenon of jeonse and monthly rent prices rising together could intensify. Kwon Dae-jung, a distinguished professor of economics and real estate at Hansung University, said, “The rental crisis is unlikely to be resolved in the short term,” adding that “with sale prices as well as jeonse and monthly rent prices rising together, particularly in the Seoul metropolitan area, the housing cost burden on tenants is growing.”

He emphasized, “With home prices having risen and lending regulations tightened, demand that cannot afford to purchase homes has no choice but to remain in the rental market,” and stressed that “since jeonse and monthly rent are effectively the last housing ladder for those without homes, policy supplements are needed to alleviate the supply-demand imbalance in the rental market.”

Daegu’s Divergence: Sales Falling While Rentals Rise

In Daegu, the trajectories of the sales market and the rental market are moving in clearly opposite directions. According to Korea Real Estate Board price indices, Daegu’s sale price index fell from 101.66 in July last year to 99.91 in July this year, a decline of 1.75 points over the year. In contrast, the jeonse price index rose from 99.31 to 100.07 over the same period, a 0.76-point increase, while the monthly rent price index also climbed from 99.30 to 100.14, a 0.84-point gain.

This represents a divergence where falling home prices are not translating into reduced jeonse and monthly rent burdens, but rather coinciding with rising rental prices. Daegu’s average jeonse-to-sale price ratio rose from 69.1% in July last year to 70.8% in July this year, an increase of 1.7 percentage points over the year.

Actual rental listings on the market are also shrinking rapidly. As of the 3rd, monthly rent listings in the Daegu area totaled 2,370, down 51.6% from 4,890 a year earlier. Jeonse listings also decreased by 48.9%, from 8,960 to 4,581. In contrast, the decline in sale listings was not significant. Over the same period, sale listings in Daegu fell only 3.4%, from 41,612 to 40,186.

In Daegu, the reduction in new housing move-in volume, along with declines in new supply and construction starts, has already become a reality. According to the “July 2026 Housing Statistics” released by South Korea’s Ministry of Land, Infrastructure and Transport, construction starts totaled 750 units from January through July, a 2.8% decrease. New supply this year totaled 905 units, a sharp 69.5% drop from 2,969 units in the same period last year. Completions also fell 37.4% to 7,885 units.

Lee Jin-woo, director of the Real Estate Asset Management Research Institute, said, “With the increase in move-in volume and growing uncertainty in the real estate market, purchase demand has been converting into rental demand,” adding that “with wait-and-see demand from the sales market still remaining in the jeonse market and move-in volume declining, supply is structurally bound to fall short of rental demand.”

Monthly Rent Increases Spread to Non-Apartments, Hitting the 20-30 Age Group Directly

As monthly rent increases extend even to non-apartment housing—considered the bottom rung of the housing ladder—the 20-30 age demographic with weak income and asset foundations is taking a direct hit. Seoul’s row house and multi-family housing monthly rent price index, which stood at 97.50 in January this year, climbed to 100.67 by July, a 3.25% increase over seven months. The index rose 1.49% during the same period last year, but this year’s increase is more than double that pace.

The upward trend is steepening. The month-over-month increase rate dipped from 0.36% in January to 0.31% in February, then expanded to 0.40% in March, 0.51% in April, 0.53% in May, and 0.80% in June. It eased slightly to 0.67% in July but remains elevated compared to the beginning of the first half. By region, the relatively more affordable Gangbuk area saw a larger cumulative increase of 3.73% from January through July, compared to 2.81% in the Gangnam area.

According to data analyzed by the real estate platform Dabang based on actual transaction prices from South Korea’s Ministry of Land, Infrastructure and Transport, the average monthly rent for row house and multi-family studio units of 33 square meters or less in Seoul was 690,000 won (approximately $510) in July, based on a deposit of 10 million won (approximately $7,400). In particular, the average monthly rent in Gangnam-gu, where demand for proximity to workplaces is concentrated, was 970,000 won (approximately $720)—41% higher than the Seoul-wide average. Adding management fees and individual utility costs, actual housing expenditures easily exceed 1 million won (approximately $740) per month.

Rising housing costs, combined with stagnant or declining incomes among young people, are hindering asset formation for young households. In the first quarter of this year, the average monthly nominal income for household heads aged 39 or younger was 5.3905 million won (approximately $4,000), a 1.7% decrease year-over-year—the only decline among all age groups. Over the same period, actual housing expenditure increased by 11.6% year-over-year.

The South Korean government has moved to implement measures to ease the housing burden on young people, including relaxing monthly rent support requirements and promoting the establishment of “universal public rental housing for youth” supplied in larger units near transit stations. The government has also decided to introduce public sale models such as equity-accumulation and profit-sharing schemes to enable young people with insufficient initial assets to purchase homes, and to launch the “Youth Future Bogeumjari Loan,” which applies preferential interest rates for first-time purchases of non-apartment housing priced at 400 million won (approximately $300,000) or below.

However, some point out that while the Youth Future Bogeumjari Loan is meaningful in that it lowers the lending threshold and expands housing options for young people, its policy effectiveness may be limited because non-apartment properties have lower liquidity and limited expectations for asset value appreciation, reducing purchase preference.

Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, said, “Non-apartment housing is perceived not as a purchase target but as a temporary housing arrangement, so even if purchases are encouraged, it is difficult to translate into actual demand.” She added, “Equity-accumulation sales, where prices are set at construction cost levels and ownership is acquired in stages, would likely be more preferred.”

Ham Young-jin, head of Woori Bank’s Real Estate Research Lab, suggested, “Consideration should also be given to appropriate pricing policies that young people can accept, such as differentiated rent application based on individual income levels.”