Credit: Public demand.
Jeonse 전세, the unique South Korean rental system in which the renter makes a massive deposit of up to 70% of the home value, is starting to give way to the more conventional monthly rentals 월세. In September, 65% of all new rental agreements were monthly rentals, while the rest were jeonse. The number of monthly rental agreements in September increased 39% year-over-year, while the number for jeonse in the same period decreased by 1.9%.
Jeonse is a type of jury-rigged financing system that emerged in the post-Korean War housing market in which capital markets were virtually non-existent. As South Korea has become wealthy with a sophisticated financial system, the proportion of jeonse has been on a steady decline. (See previous coverage, “Jeonse System’s Weakness.”)
