[Report] "Are all the cheap items sold out?"... Auction court sees fewer visitors, bidders drop by half

"Earlier this year, the auction courtroom was packed to capacity, but in just a month or two, the number of visitors has dropped by more than half."

On the morning of the 28th, about 80 people were seated in the auction courtroom of the 4th annex of the Seoul Central District Court in Seocho-gu, Seoul. Compared to last year, when there were virtually no visitors and the court was essentially 'closed for business,' it was quite crowded. However, compared to the bustling crowds of 200 to 300 people seen in January and February, the atmosphere was noticeably quieter. Kim, who sells auction information booklets at the courtroom entrance, said, "The surge in crowds earlier this year was just an abnormal and sudden increase."

On the morning of the 28th, at the Auction Court of the 4th Annex of the Seoul Central District Court in Seocho-gu, Seoul, about 80 people were present.
[Photo by Ryu Taemin]

There were a total of 26 residential properties up for auction that day. Only 6 of them found new owners. The rest were all passed in. The most popular property was Apartment A located in Sungin-dong, Jongno-gu, which attracted 8 bidders. The other properties received only 1 to 3 bids each. This was quite different from last month's auctions, where double-digit bids were common.

Statistics also show that the auction fever has somewhat cooled down. According to Gigi Auction, a court auction specialist company, the average winning bid rate for Seoul apartments auctioned in court this month was 33.3%. This is a 2.8 percentage point decrease from the previous month (36.1%) and a 10.7 percentage point drop compared to January (44.0%), when there was a strong upward trend. The winning bid rate refers to the ratio of properties with successful bidders among those put up for auction. For example, a winning bid rate of 33.3% means that out of 10 properties auctioned, 3.3 found new owners.

This appears to be a result of the depletion of the previously popular passed-in properties. Since the second half of last year, as passed-in properties accumulated in the apartment auction market, cheaper properties piled up. Early this year, demand surged for properties that had been passed in two or three times or more, which drove popularity. In fact, in January, out of 44 Seoul apartments sold at auction, 41 (93.1%) had been passed in at least once. However, recently, as fewer passed-in properties remain in the auction market, bids have relatively decreased, leading to a lower winning bid rate.

Increased competition is also analyzed to have had an impact. For example, on the 14th, Apartment B in Yangjae-dong, Seocho-gu, Seoul, with an area of 160㎡, attracted 29 bidders and was sold at 1,159 million KRW, which is 266.22 million KRW higher than the minimum price of 839.68 million KRW. On the 15th, Apartment C in Myeonmok-dong, Jungnang-gu, with an area of 60㎡, attracted 19 bidders and was sold at 478.88 million KRW, 125.6 million KRW higher than the minimum price of 353.28 million KRW. Lee Sang-heon (52), who participated in the auction on the 28th, said, "It is true that auctions still have merit, but as many bidders gather and prices rise, the burden of winning bids is increasing."

By region, apartments located in the Gangnam area were found to have higher prices. According to Gigi Auction, the winning bid rate in the Gangnam 3 districts (Gangnam, Seocho, Songpa-gu) this month was 82.4%, which is 4.3 percentage points higher than the Seoul average of 78.1%. The winning bid rate refers to the ratio of the winning bid price to the appraised value; for example, a rate of 82.4% means that an officetel appraised at 100 million KRW was sold for 82.4 million KRW.

Joo Hyun Lee, a senior researcher at Gigi Auction, explained, "Demand for real estate in the Gangnam area still remains, so transactions occur at higher prices than in non-Gangnam areas. Especially, winning bids through auctions are more popular because they do not require separate land transaction permits."