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More people moving out of South Korean capital amid spiralling housing prices

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Apartment complexes in central Seoul, South Korea. YONHAP NEWS AGENCY

More people moving out of South Korean capital amid spiralling housing prices

Some 400,000 people were found to have left Seoul to move to neighbouring metropolitan areas last year, government data showed on February 8, with surging housing prices being cited as the key reason behind the exodus.

According to Statistics Korea, a total of 406,975 people submitted change-of-address requests from Seoul addresses last year. Of the total, 362,116 moved to Gyeonggi province, which surrounds the capital, while 44,859 left for Incheon to the west.

The latest data corresponds with the Seoul city government’s data released last year, which found that an annual average of 580,000 people left Seoul to move to other areas across the country from 2010-2020. Of those who left the capital, 31.4 per cent chose housing issues as the key reason in a survey tied to the data showed.

In the same survey, an annual average of 480,000 people were found to have moved in to the city during the cited period, which means about 100,000 people are moving out of the city every year.

Last year, the average price per housing unit in the capital city came to 1.3 billion won ($1.1 million), according to Real Estate R114, a real estate transaction data provider. The corresponding prices for Gyeonggi and Incheon came to 666.4 million won and 516 million won, respectively, both half the average price of the units in Seoul.

Real Estate R114 data also showed that Seoulites have been experiencing housing supply issues, with only 8,894 homes sold throughout 2021, compared with 41,906 homes sold the previous year. Some 136,605 homes were sold in Gyeonggi last year alone and 45,032 homes in Incheon in the same period.

While it has become difficult to purchase homes in Seoul with the prices hitting a new high every year, it has become even more difficult to rent homes through a system called “jeonse”, a system that Koreans favour over monthly rents.

The decades-old system allows tenants pay a large lump-sum deposit to the landlord, which is then returned at the end of the rental agreement, which usually lasts two years.

During the lease period, the tenants do not pay monthly rent and the landlord can make investments with the money as long as the principal amount is returned to the tenants in the end.

According to latest data compiled by KB Kookmin Bank, the nominal price gain rate of apartment jeonse prices in Seoul has eclipsed the average price increase rate of actual apartment prices last month. The average jeonse gain rate came to 0.31 per cent, while the actual apartment price gain rate came to 0.23 per cent. This is the first time in 12 months that the jeonse rate became higher than the actual apartment rate.

Since 2017, the President Moon Jae-in’s administration has adopted more than 20 sets of real estate measures to cool down the heated housing market, with the policies focused on imposing heavier taxes on multiple-home owners and bolstering tenants’ rights.

But the rules failed to curb the housing prices, which angered Koreans who believed Moon’s election pledges to cool down the market.

Deputy Prime Minister and finance minister Hong Nam-ki in October apologised on behalf of the Moon administration for failing to “stabilise the real estate market” despite policy efforts, in a parliamentary audit.



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