Nationwide Apartment Auctions, Winning Bid Rate Declines for Four Consecutive Months...Average Number of Bidders Increases

January Nationwide Court Auction Apartment Winning Bid Rate Records 97.1%
Winning Bid Rate 12.6 Percentage Points Lower Than September Last Year
Winning Bid Rate Expected to Remain Low Due to DSR Regulations and Base Interest Rate Hikes

Number of Auction Proceedings, Winning Bid Rate, and Success Rate in the National Apartment Auction Market / Graph=Jiji Auction

[Asia Economy Reporter Hwang Seoyul] In the court auction market, the nationwide apartment bid-to-price ratio in January recorded 97.1%, falling to the 90% range for the first time in 13 months.

According to the ‘January 2022 Auction Trend Report’ recently released by Gigi Auction, a specialized court auction company, the nationwide apartment auction market bid-to-price ratio recorded 97.1%, down 3.5 percentage points from the previous month (100.6%), showing a decline for four consecutive months since October last year. The bid-to-price ratio is the ratio of the winning bid price to the appraised value, and if it exceeds 100%, it means the winning bid price is higher than the appraised value.

The winning bid rate also remained low. Last month, there were 1,253 apartment auctions nationwide, of which 566 were successful bids. The winning bid rate was 45.2%, up 2.5 percentage points from December last year but significantly lower than September last year (57.8%). Gigi Auction expected the apartment auction market’s winning bid rate to remain sluggish for a while due to strengthened DSR (Debt Service Ratio) regulations and base interest rate hikes starting last month.

However, the average number of bidders is increasing again as buying demand continues for apartments that have failed at least once and for mid-to-low-priced apartments under 600 million KRW in the metropolitan area. The average number of bidders was 6.1, an increase of 1.0 from the previous month (5.1).

Last month, the apartment bid-to-price ratio in Seoul was 103.1%, maintaining a similar level to the previous month (103.3%). The winning bid rate (48.6%) slightly rebounded compared to the previous month (46.9%) but was 26.4 percentage points lower than the same month last year (75.0%). The average number of bidders increased by 3.0 from 3.4 in the previous month to 6.4.

In Gyeonggi-do, both the apartment bid-to-price ratio and winning bid rate declined. The bid-to-price ratio fell 6.6 percentage points from the previous month to 103.3%, and the winning bid rate dropped 7.4 percentage points to 54.5%.

In Incheon, the winning bid rate (56.4%) fell 9.0 percentage points from the previous month, but the bid-to-price ratio rose 3.5 percentage points from 105.7% to 109.2%. Gigi Auction explained that the increase in the bid-to-price ratio seems to be due to buying demand concentrated on low-priced apartments in the 100 to 200 million KRW range.

For two consecutive months, the apartment bid-to-price ratios in the five major provincial metropolitan cities also declined. The largest drop was in Gwangju, which recorded 95.3%, down 11.6 percentage points from the previous month.

Among the eight provinces, Gangwon region’s apartment bid-to-price ratio (107.8%) rose 3.3 percentage points compared to Jeonwon (104.5%), maintaining the only 100% range outside the metropolitan area. Jeju was 97.3%, Chungnam 94.4%, and Jeonnam 92.4%, all rising from the previous month, while Gyeongnam (95.8%) maintained a similar level to the previous month.

Gyeongbuk (86.7%) showed a significant drop, falling 12.6 percentage points from the previous month. Chungbuk (93.6%) and Jeonbuk (93.7%) also declined by 5.5 percentage points.