Half of South Korea’s households leased homes through “jeonse” or monthly rental system, and the average jeonse deposit surpassed 100 million won ($89,554) for the first time

Average ‘jeonse’ deposit exceeds $90,000 for first time

2013.08.27 11:26:01

Half of South Korea’s households leased homes through “jeonse” or monthly rental system, and the average jeonse deposit surpassed 100 million won ($89,554) for the first time. Jeonse is a lease system in which a tenant pays a large lump-sum deposit for typically a two-year rental period. Four out of 10 jeonse tenants deposited 100 million won or more to lease homes, with half of jeonse tenants finding it difficult to afford an over five percent increase in deposit. To address the problem, the financial regulator is pondering curbing big jeonse loans and instead increasing jeonse or monthly rental loans for the underprivileged. The numbers are a result of a survey of 5,000 heads of households aged between 20 and 59 conducted and released by the Korea Housing-Finance Corporation Tuesday. Of the polled, 49.6 percent lived in their own housing last year, down one percentage point from 50.6 percent of 2011. This is a steep decline from 63.6 percent of 2007. In contrast, households living in homes rented on a jeonse basis accounted for 25.4 percent of respondents, and those on a monthly payment basis 13.2 percent. Semi-jeonse, a lease system in which jeonse deposit is lowered in exchange for monthly payment, was rare as lately as 2011. But 4.4 percent of respondents were renting housing on a semi-jeonse basis last year, indicating a shift away from jeonse to monthly payment lease. The median jeonse deposit came to 101.8 million won last year, above the 100 million won mark, and surged more than 10 million won from 90.4 million won of 2011. The average jeonse deposit stood at 75.2 million won in 2010.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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