National Apartment Winning Bid Rate Hits Lowest This Year... Impact of Interest Rate Hikes and Inventory Backlog

Gigi Auction 'June 2022 Auction Trend Report'

Number of Apartment Auction Cases Nationwide, Successful Bid Rate, and Auction Success Rate / Data provided by Gigi Auction

[Asia Economy Reporter Hwang Seoyul] The apartment bid-to-price ratio in the auction market hit its lowest point this year. Factors such as interest rate hikes, inventory backlog in the sales market, and strengthened loan regulations including DSR (Debt Service Ratio) appear to have influenced this trend.

According to the 'June 2022 Auction Trend Report' released on the 7th by Gigi Auction, a court auction specialist company, the nationwide apartment bid-to-price ratio recorded 93.8%, down 0.5 percentage points from the previous month (94.3%). There were 1,330 auction cases, of which 599 were successfully bid. The average number of bidders also decreased by 1.1 from the previous month (7.2) to 6.1. The success rate rose by 2.2 percentage points from 42.8% last month to 45.0%.

Looking at the metropolitan area, both the bid success rate and bid-to-price ratio for Seoul apartments increased. The success rate rose by 20.5 percentage points from 35.6% last month to 56.1%, and the bid-to-price ratio increased by 13.2 percentage points from 96.8% to 110.0%, marking the highest level this year. High-priced apartments in the Gangnam area, unaffected by loan regulations and interest rate hikes, were sold at high prices, raising the overall bid-to-price ratio for Seoul apartments. The average number of bidders was similar to the previous month, recorded at 3.6 compared to 3.8.

All auction indicators for Gyeonggi apartments declined. The bid-to-price ratio dropped 3.0 percentage points to 90.7%, marking the lowest point this year. The success rate fell by 8.2 percentage points to 46.4%, and the average number of bidders decreased by 1.3 from the previous month to 8.0.

In Incheon, the bid-to-price ratio entered the 80% range for the first time in 1 year and 6 months since December 2020. It fell 8.0 percentage points from 96.8% last month. The average number of bidders also decreased by 1.2 to 5.4. The success rate rose by 8.2 percentage points to 50.8%. Both Gyeonggi and Incheon apartments, which had shown strong bid-to-price ratios mainly for mid- to low-priced apartments, appear to have seen a weakening in buying demand.

Among the five major metropolitan cities in the provinces, only Daejeon saw an increase in the bid-to-price ratio (88.4%). However, it remained below 90% for two consecutive months, showing signs of stagnation. Daegu, which recorded the lowest bid-to-price ratio (81.3%), hit its lowest level since January 2014 (81.1%). Ulsan recorded 93.3%, Busan 95.9%, and Gwangju 96.0%, all down from the previous month.

Among the eight provinces, Gangwon Province had the highest bid-to-price ratio at 108.2%, rising 8.9 percentage points from 99.3% last month, re-entering the 100% range after three months. Apartments priced below 100 million KRW in official assessed value, centered around Gangneung and Chuncheon cities, showed strong performance.

The region with the largest drop in bid-to-price ratio was Jeollanam-do (87.4%), falling 18.7 percentage points from 106.1% last month. Following were Jeollabuk-do (85.8%) down 9.4 percentage points, Chungcheongbuk-do (84.5%) down 6.4 percentage points, Gyeongsangbuk-do (91.9%) down 4.9 percentage points, Gyeongsangnam-do (89.5%) and Chungcheongnam-do (90.6%) down 2.9 and 0.6 percentage points respectively. Jeju and Sejong, with only one successful bid each, recorded bid-to-price ratios of 100% and 71.6%, respectively.