An Empirical Study on the Determinants and Contributions of Jeonse Supply and Demand Before and After the Implementation of the 2020 Lease Laws

This study analyzes the determinants of Jeonse supply and demand and evaluates the contribution of each determinant using Shapley decomposition, based on panel data from 17 metropolitan regions in South Korea from January 2015 to December 2023. The results indicate that Jeonse prices, Jeonse loan interest rates, housing completions, and housing transactions significantly affect Jeonse supply and demand. After the introduction of the Lease Protection Act, the influence of Jeonse loan interest rates became more pronounced. In the Seoul metropolitan area, the contribution of Jeonse prices decreased while that of housing transactions increased, whereas in non-metropolitan areas, the contribution of Jeonse prices increased while that of housing transactions declined, demonstrating a differentiated pattern across regions. This suggests that the importance of financial factors in the Jeonse market has expanded since the policy’s implementation and that the structural dynamics of the Jeonse market have evolved differently between metropolitan and non-metropolitan areas. These findings highlight the necessity of appropriately regulating liquidity in Jeonse loans to mitigate price volatility and strengthening restrictions on the excessive use of Jeonse deposits as leverage for housing purchases.