“I Have Never Seen This Before”: Seoul Apartments Shift from Jeonse to Monthly Rent and the Housing Outlook (Weekly Money Issues: Real Estate)

An independent exercise, not a statement by the video creator or verification of every claim in the video.

Compare interest and rent for the same deposit difference

Compare hypothetical alternatives for the same home and period: a KRW 500 million jeonse deposit versus a KRW 300 million deposit plus KRW 0.6 million monthly rent. Initially assume identical costs for the common KRW 300 million deposit. Borrowing the additional KRW 200 million entirely at 5% costs KRW 10 million annually, or about KRW 0.833 million per month. Annual rent is KRW 7.2 million, making the extra deposit loan’s interest KRW 2.8 million higher. Excluding other costs, the break-even loan rate is 7.2÷200=3.6%. At 3%, annual interest is KRW 6 million, or KRW 1.2 million below rent. The comparison changes with actual financing costs. Separately, if hypothetical contracts change from 100 monthly rentals and 100 jeonse contracts to 90 monthly rentals and 60 jeonse contracts, the rental share rises from 50% to 60% despite fewer monthly contracts. A rising share is not synonymous with increasing demand or supply.

Check for yourself

1. Are the homes, contract periods, maintenance charges, guarantee fees and transaction fees comparable?
2. If the additional deposit uses equity, what opportunity cost replaces the loan rate?
3. Does the denominator cover new contracts, renewals too, or all occupied households?

Limits of application

All amounts, rates and contract counts are hypothetical. Costs of the common deposit are assumed equal; maintenance, loan guarantees, brokerage, tax credits, deposit recovery risk and changing rates are excluded. The break-even rate is a cost-comparison measure, not a statutory conversion rate or lawful rent-increase ceiling. Legal application requires separate checks of contract type and conversion circumstances. This calculation does not decide whether to buy.