Seoul Apartment Auction Winning Bid Rate Hits Record High of 111.8%

Despite Government Regulation Tightening, House Prices Rise
Investors Gather in Auctions with Weak Regulations
Few Properties Available, Many Bidders Push Winning Prices Up

View of Seoul apartments from the 63 Building observatory./Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Onyu Lim] In October, the auction success rate for apartments in the Seoul area reached an all-time high. This is analyzed to be due to the demand pouring into the auction market as housing prices rise and spread to mid-to-low priced homes on the outskirts of Seoul despite the government's successive regulations.

According to Gigi Auction on the 9th, out of 14,091 auctions conducted nationwide in courts in October, 4,787 were successfully sold, showing a success rate of 34%. The average auction price compared to the initial appraised price was 65.5%, and the average number of bidders per case was 3.6.

In particular, apartments in the Seoul area are experiencing a shortage even in the auction market, resulting in sales at prices much higher than the appraised value. Only 59 apartments in Seoul were put up for auction in October, marking four consecutive months below 60 cases since July. This appears to be because as housing prices rise sharply, debtors prefer market sales over handing over homes through auctions.

As the supply of properties decreases, the auction success rate for Seoul apartments has exceeded 70% for four consecutive months, and the average auction price rate reached 111.8%, the highest since statistics have been compiled.

For example, an apartment appraised at 1 billion KRW would have been sold for 1.118 billion KRW due to bidding competition. Accordingly, the total auction price of 44 Seoul apartments that found new owners last month (44.8 billion KRW) exceeded 10% of the total auction price of all residential facilities (2,255 cases) amounting to 430.9 billion KRW.

A Gigi Auction official stated, "Seoul apartments are experiencing a shortage and are literally being treated like 'royal envoys' in auctions."

Meanwhile, among the auctioned properties last month, residential facilities accounted for 6,598 cases, or 46.8% of the total, and the proportion of successful auctions was slightly higher at 47.1%. About half of the properties sold through auctions are residential facilities. The concentration of investors is even more severe. The total number of bidders who submitted bids in the October auction market was 16,992, of which 60%, or 10,151, bid on residential facilities. Except for July and August, the monthly proportion of bidders for residential facilities has exceeded 60% this year. In contrast, the success rate for office and commercial facilities was 25.3%, showing a decline for two consecutive months. The number of bidders and the proportion of auction prices for these facilities were only 9.4% and 18.2%, respectively, contrasting sharply with residential facilities.