South Korea's housing market
Landlords are having to ditch a century-old rental system
Jeonse's future is hazy
MOST South Korean urbanites would leap at the chance to part with $150,000 to rent a smallish flat for three years in Seoul, the capital.
These days, however, most Korean landlords would spurn such a measly deposit.
Korea's unusual rental system, known as jeonse, does not involve monthly rental payments.
Instead, tenants provide landlords with a deposit, typically between a quarter and half of the property's value, to invest for the duration of the lease.
Property owners keep the returns and then repay the lump sum at the end of the tenancy.
Average deposits have now risen for 76 consecutive weeks in Korea, the longest streak ever.
Thousands of jeonse leases in the capital are now as high as 90% of the value of the house; they sometimes exceed it in areas where property prices have fallen since leases were agreed.
The jeonse system was once prized by both tenants and landlords.
In the 1960s rapid urbanisation drew farmers to Korea's thriving cities, boosting demand for homes at a time when capital was being mobilised for state-led industrial development.
The government thought property unproductive, so restricted banks from lending to developers, homeowners and tenants, says Son Jae-young, a professor of real estate at Konkuk University in Seoul.
In response jeonse emerged as a self-help funding mechanism.
Tenants' deposits financed landlords' properties, interest-free, while pushing renters to pool savings: over time, the deposit would become their own home-purchase fund. For decades, monthly rental was synonymous with poverty.
Yet interest rates and property prices have sunk since 2008.
To earn a decent return on their investments, landlords have been raising jeonse prices.
Tenants have tended to take out low-interest loans to cover the hike.
Since 2009 such borrowing has almost doubled, from 33.5 trillion won to 60 trillion won, according to the Bank of Korea, the central bank.
That undermines one of the main advantages of this unusual system.
Previously the large cash deposits that tenants had to build up helped shelter the Korean property market from bubbles, by restraining price increases, and from busts, by providing buyers with ready pots of cash.
It also helped protect the banking system from losses on risky mortgages.
Long considered a deal between individuals, the deposits are still not included in Korea's household debt statistics, nor in calculations of average loan-to-value ratios.
Central bank data on jeonse loans only go back to 2009.
But Sun Dae-in, the author of a recent book on Korea's housing market, says the deposits held by landlords must be seen as debts.
但是，近期出版的有关韩国住房市场一书的作者Sun Dae-in 这样说道：被房东持有的保证金必须被视作为债务。
He estimates that about half of all jeonse money is used to finance a second or third property.
If added to housing loans, the average LTV ratio would jump from just under 50% to over 75%.
Last November the Bank of Korea estimated that a tenth of Korea's 3.7m jeonse landlords may find it hard to repay tenants' deposits.
Already more landlords are choosing to rent their properties for a monthly fee: 40% did so last year, up from 34% in 2012.
But some homeowners would rather not ditch jeonse entirely: more than a quarter are using its hefty sums to pay off a mortgage on the rented property, according to the Bank of Korea.
They often offer tenants the option to substitute a monthly payment for an increase in the deposit.
A hybrid system, still unique to Korea, is taking root.