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| An aerial view of residential apartment buildings in southern Seoul, June 7. Yonhap |
By Yi Whan-woo
The housing market in Korea faces growing optimism on its path to recovery following months of rate freezes, with a record number of would-be homebuyers interested in purchasing homes ― for the first time in two years.
Also, more than 60 percent of all transactions in the house lease market for the second consecutive month as of April were for "jeonse" contracts, a unique rental system in Korea in which a tenant gives the landlord a large fixed-sum deposit over a rent period of typically two years.
The ratio of jeonse contracts went down to as low as 47.4 percent last December due to aggressive rate hikes delivered by the Bank of Korea (BOK).
"The increase in the number of would-be homeowners and also the jeonse rate in the housing market suggests more people are willing to take out housing loans following the rate freeze," an industry source said, referring to the base rate that has remained unchanged at 3.5 percent since January.
The rate freeze led to a fall in interest rates for housing loans to almost as low as 3 percent.
Under the circumstances, a survey released Monday by housing rental app Zigbang showed that 68.7 percent of 1,056 respondents plan to buy a home in the second half of 2023 or the first half of 2024.
The rate marks the highest level since May 2021 at 66.1 percent.
"The result shows that people are optimistic about the rate freeze in relation to housing," the source said.
A separate data set released by the Seoul Metropolitan Government on housing transactions showed that jeonse accounted for 61.5 percent of rental housing in March and 61.2 percent in April.
It was the first time that the ratio exceeded 60 percent since November 2021 when it hit 61.6 percent.
The aggressive rate hikes delivered by the Bank of Korea (BOK) had prompted people to find more affordable ways to lease housing, notably monthly rent.
