Seoul Apartment Winning Bid Rate Hits Record Low... Auction Market Also Faces Transaction Cliff

Gigi Auction 'September 2022 Auction Trend Report'

Number of Apartment Auctions Nationwide, Winning Bid Rate, and Success Rate / Data provided by Gigi Auction

[Asia Economy Reporter Hwang Seoyul] The auction success rate for apartments in Seoul has hit the lowest level ever, recording in the 20% range. This means that only 2 out of every 10 properties listed in the auction market were successfully sold. As the apartment transaction freeze phenomenon extends into the auction market, the nationwide auction success rate also showed the lowest figure in over three years.

According to the 'September 2022 Auction Trend Report' released on the 7th by Gigi Auction, a court auction specialist company, the number of apartment auctions nationwide was 1,412, of which 497 were successfully sold. The success rate was 35.2%, down 6.3 percentage points from the previous month (41.5%), marking the lowest level in 3 years and 3 months since June 2019 (34.6%). The auction price ratio recorded 83.1%, down 2.8 percentage points from the previous month (85.9%), and the average number of bidders was 5.3, showing a monthly decline since May.

Trends in the Number of Apartment Auctions and Winning Bid Rates in Seoul Over the Past Year / Data provided by Gigi Auction

The auction success rate for apartments in Seoul recorded an all-time low of 22.4%, a drop of 14.1 percentage points from the previous month (36.5%). The auction price ratio also fell for the third consecutive month, recording 89.7%, down 4.0 percentage points from July (93.7%). The average number of bidders also decreased by 1.9 from the previous month to 4.0. Senior researcher Lee Juhyun of Gigi Auction analyzed, "The accumulation of unsold properties due to the transaction freeze in the sales market and the weakening buying power caused by concerns over additional interest rate hikes are affecting the decline in apartment auction indicators."

The auction success rate for apartments in Gyeonggi Province was 33.8%, down 10.2 percentage points from the previous month (44.0%). The auction price ratio recorded 79.7%, the lowest in over nine years since August 2013 (78.4%). The average number of bidders increased by 0.7 from the previous month to 6.7. In Incheon, both the auction success rate (26.5%) and the average number of bidders (3.0) hit all-time lows. Although the auction price ratio rose by 2.0 percentage points from the previous month to 80.0%, it remains at a low level.

Number of Apartment Auctions and Winning Bid Rate Trends in Daejeon Over the Past Year / Data=ZigZag Auction

The five major metropolitan cities in the provinces also showed signs of stagnation. The auction price ratio for apartments in Daejeon remained in the 70% range for three consecutive months at 76.4%, and the auction success rate was 20.0%, the lowest nationwide. Gwangju saw the largest nationwide drop in auction price ratio, decreasing by 8.6 percentage points from the previous month. Busan (78.3%) fell by 5.2 percentage points from the previous month, entering the 70% range for the first time in 15 years, while Daegu (79.5%) and Ulsan (86.4%) also declined compared to the previous month.

Among the eight provinces, Jeonbuk (94.9%) saw the auction price ratio rise by 15.2 percentage points from the previous month (79.7%), and Jeju (90.8%) increased by 4.0 percentage points from the previous month (86.8%). Gangwon maintained the highest auction price ratio nationwide at 99.4%, the same as the previous month.

The auction price ratio for apartments in Chungbuk (80.4%) fell by 8.3 percentage points from the previous month (88.7%), and Gyeongbuk (82.3%) dropped by 7.1 percentage points. Chungnam (87.8%) and Jeonnam (79.3%) decreased by 5.6 and 5.0 percentage points respectively, while Gyeongnam (86.2%) fell by 1.7 percentage points. Sejong, with only one successful auction, recorded an auction price ratio of 70.1%.