The Apartment Auction Market Is Heating Up... Yet 'Auction Withdrawals' Have Actually Increased

Preference for Debt Repayment through Sales Amid Soaring House Prices... 1,679 Withdrawals This Year
September Nationwide Apartment Auctions at 1,198 Cases... Half Compared to Last Year
Record High Winning Bid Rate 57.8% and Winning Bid Price Ratio 107.6%
Concerns Over Further Increase in Winning Bid Price Ratio Due to Shortage Expectations

Trends in the Number of Apartment Auctions Nationwide and the Winning Bid Rate (Source: Gigi Auction)

[Asia Economy Reporter Tae-min Ryu] As the apartment auction bid rate at court auctions hits an all-time high and the real estate auction market heats up, the rate of auction withdrawals is also steadily increasing. This is because debtors prefer to repay their debts through sales amid soaring housing prices. Accordingly, there is also a forecast that the bid rate will rise further as apartment auction listings become scarce.

According to Gigi Auction, a court auction specialist company, the number of apartment auctions nationwide last month was 1,198, marking the lowest point this year. This is about half (51.1%) compared to 2,343 cases a year ago and 310 fewer than the 1,508 cases in the previous month.

The sharp decline in apartment auction listings is analyzed to be due to an increase in homeowners resolving debts through sales amid soaring housing prices. In fact, Gigi Auction explains that since the court auction appraisal price is generally set lower than the market price, auction withdrawals increase when market buying demand is strong.

The nationwide apartment auction withdrawal rate has been steadily rising this year. It maintained 4-6% last year, reached double digits for the first time at 10% in March this year, and hit a record high of 12% last month. The number of withdrawals also increased. This year, the total number of apartment auction withdrawals nationwide was 1,679, about 100 more than the 1,595 cases during the same period last year.

The industry diagnosis is that the soaring auction success rate and bid rate are also related to this. As auction withdrawals reduce the number of bidding items, competition becomes fiercer. The nationwide apartment auction success rate rose to 57.0% in August, its highest, and further climbed to 57.8% last month. The bid rate, which was 100.2% in January, also jumped to 107.6% last month. The success rate refers to the ratio of actually successful auction items among all auction listings, and the bid rate means the ratio of the winning bid price to the appraisal price. For example, an apartment appraised at 100 million KRW was sold at 107.6 million KRW.

There is also a forecast that the already record-high bid rate will rise further as the scarcity of listings continues. Joo-hyun Lee, manager at Gigi Auction, said, “As auction withdrawals increase, the already insufficient auction market listings are becoming even scarcer,” adding, “As competition intensifies, bidders are likely to submit higher prices to increase their chances of winning, so the bid rate is expected to soar further.”