['Hot Place' Auction]②Inside the Court... Dozens Compete for One Apartment

Report from Seoul Central District Court and Other Auction Sites
Apartments Popular After Two or Three Failed Bids...Tension Just Before Winning Bid
Study Groups Gather in Threes and Fives to Prepare for Second Half Auctions

[Asia Economy Reporters Onyu Lim, Taemin Ryu, Minjae Kwak] "The auction courtroom, which had been at a standstill, is now bustling as if nothing ever happened, with all 150 seats fully occupied."

At the entrance of the auction courtroom in the 4th annex of Seoul Central District Court in Seocho-gu, Seoul, on the 19th, a vendor selling auction information booklets for 5,000 won each welcomed the revived atmosphere of the auction hall, saying, "The coffee vending machine, which was removed due to poor sales, will be brought back."

In fact, the courtroom was crowded with people, surprising everyone who entered. While there were only about 50 people at the opening time of 10 a.m., the number swelled to nearly 200 by 11:20 a.m., when the bidding documents closed. A man in his 30s whom we met that day said, "I thought if house prices dropped, I could buy my own home cheaply through auctions, but seeing the crowd, it's surprising that many people think the same."

Grab the 'Half-Price Apartment' That Failed Three Times... Dozens in a Battle of Wits

Recently, more people are entering the niche real estate market of auctions. They range from people in their 20s starting financial investments, 30s preparing for newlywed homes, 40s needing extra income, to those in their 50s and 60s taking on new challenges after retirement. In auction courtrooms where actual users and investors mix, the items that participants focus on share a common trait: prime properties like half-price apartments that have failed to find owners multiple times and are priced far below the appraised value.

Each time a property fails to sell at auction, the minimum bid price in Seoul drops by 20%, and in Incheon and Gyeonggi by 30%. Recently, due to COVID-19 and a sharp decline in housing prices, auction courtrooms were neglected, leading to an accumulation of failed auction properties. Mr. Jeong, in his 70s, who has been consistently participating in auctions for decades, said, "If you strategize well, a path opens to acquire good properties at very low prices."

The property that attracted the most bidders that day was a 131㎡ (exclusive area) unit in Daebang 2nd e-Pyeonhansesang, Daebang-dong, Dongjak-gu. A total of 15 people submitted bidding documents. It had failed auctions in November last year and January this year, lowering the minimum bid price to 64% of the appraised value of 1.432 billion won, down to 916.48 million won. Just before the case number and the highest bidder's name were announced, tension filled the courtroom. After a fierce competition among the 15, Mr. Jo won the bid at 1.12367 billion won. Although this is over 200 million won higher than the minimum bid, it is more than 400 million won lower than the recent asking price of 1.6 billion won.

The popularity of properties with drastically reduced prices due to repeated failures was also strong in Gyeonggi auction courtrooms. On the 14th at the Anyang branch of Suwon District Court, 30 people bid on a 59㎡ unit in Samsung Raemian, Manan-gu, Anyang. This property also failed three times, dropping the minimum bid price to about half of the appraised value of 800 million won, down to 409.6 million won. Mr. Lee, in his 60s, who came from Gangwon-do to bid on this property, explained, "It has a good view along the Anyangcheon stream and is well located right in front of Anyang Station. The low minimum bid price makes it much better than buying through regular sale." Another Mr. Lee, who submitted the highest bid of 529.99 million won, won the auction.

With a Surge in Real Estate Auctions Expected in the Second Half, Mock Bidding Study Groups Appear

In the courtroom, many were spotted rehearsing in preparation for a further drop in housing prices and a flood of auction properties in the second half due to the impact of interest rate hikes. Mr. Ahn, a man in his 30s who took a day off to participate in mock bidding at Seoul Central District Court, said, "A friend won a Suwon apartment cheaply at auction a year ago but regrets it now as prices have dropped further. I plan to wait for prices to fall more and bid on properties that have failed multiple times."

Mr. Park, in his 60s, who visited the Anyang branch with his daughter, said, "I'm studying because I think it would be good to buy a home at auction for my daughter who works in Anyang. Since properties that failed three times attract many bidders, buying at a price lower than the asking price when it fails twice seems like a good strategy."

Besides this, real estate auction study groups and students gathering in small groups to fill out bidding documents were commonly seen. A woman in her 50s said, "I'm very interested in auctions, so my friends and I created a group chat to share information. Today, I came to Seoul Central District Court, and another friend went to the Southern District Court."

Thanks to the government's recent significant easing of real estate loan and tax regulations, auction investments by homeowners are also reviving. A staff member who arranges loans for successful bidders in front of the courtroom said, "Since the beginning of this year, many people have been flocking to court auctions. Especially since March, rental business operators can also get mortgage loans, so it's easy to see people in their 50s and 60s visiting auction courtrooms for the first time to consult."