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The prolonged slump in the nation's property market is causing headaches for homeowners
and renters alike.
As more people shy away from purchasing homes,. rent prices are soaring.
Yoo Li-an reports. The slumping housing market and falling property prices are leading more
and more people to turn their backs on purchasing homes and toward so-called deposit rentals
or "jeon-sae."
Jeon-sae is a uniquely Korean practice in which renters pay a lump sum of deposit money
up front and receive it back after two years.
But the soaring demand for jeon-sae has led to higher rent prices,. placing a huge financial
burden on the people who are seeking to rent.
Housing rental prices in the capital, for example, have risen by over 19 percent while
home prices have fallen by five in the past three years.
To pay for the rising costs, the total amount of loans given out to pay for rent reached
over 8-trillion won, or roughly 7-billion U.S. dollars as of May, when looking at the
data of six major commercial banks combined.
That's nearly three times the amount lent out just two years ago.
And to make matters worse,. when homeowners who are unable to pay back their mortgages
decide to auction off their apartments, it's the tenants of those apartments that are often
affected.
That's because if the contract price is much lower than the home price,. the tenant's deposit
is used to pay back the homeowners' mortgages.
The rise in the number of homeowners who have been unable to pay off high mortgage payments,.
the so-called "house poor,". has long been a result of the slumping housing market.
"But now, the problem has expanded to include people categorized as 'rent poor.'
Just in Seoul, one in 20 households is believed to be part of this group.
Yoo Li-an, Arirang News."