[Asia Economy Reporter Tae-min Ryu] As housing transactions sharply contract, the real estate auction market continues to slow down. Since the fourth quarter of last year, the number of bidders has decreased, leading to a decline in the winning bid rate. With the application of the Debt Service Ratio (DSR) regulation this year, it is expected that the cautious stance may further increase.
According to the 'Auction (Seized Property) Trend Report' published on the 5th by Korea Asset Management Corporation (KAMCO), the winning bid rate in the fourth quarter of last year recorded 79.4%, down 6.9 percentage points (p) from the previous quarter (86.3%). The winning bid rate is the ratio of the winning bid price to the appraised value; for example, if the appraised value is 100 million KRW and the winning bid rate is 79.4%, it means the property was sold for 79.4 million KRW.
The bidding enthusiasm also decreased. The number of bidders in the fourth quarter of last year was 4,980, down 1,814 (26.7%) from the third quarter (6,794). The competition rate, calculated by dividing the number of valid bidders by the number of auctioned items, also fell from 2.99 to 1 to 2.61 to 1 during the same period.
As the number of bidders declined, the number of bids and successful auctions decreased by 667 (17.8%) and 362 (15.9%) respectively compared to the previous quarter. However, the winning bid rate rose by 1.4 percentage points from 60.4% to 61.8% during the same period.
On an annual basis, a total of 8,281 auction bids were conducted last year, with 19,348 participants and 6,415 successful auctions. The winning bid rate was 77.5%, the winning bid price ratio was 82.9%, and the competition rate was 3.02 to 1.
It is interpreted that the auction market is freezing as the real estate market slows down along with strengthened loan regulations. KAMCO sells public assets such as national property, seized property, entrusted property, and public assets of national or local government public institutions through Onbid, an online public asset disposal system, using a public competitive bidding method.
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