"Unable to Withstand High Interest Rates and Falling House Prices" Nationwide Apartment Auctions Increase 73% in One Year

Last month, the number of apartment auctions nationwide increased by 73.1% compared to a year ago. This is interpreted as a result of more apartments entering the auction market due to the burden of high interest rates and the continued decline in sale prices.

According to the 'March 2023 Auction Trend Report' released on the 10th by court auction information company Gigi Auction, the number of apartment auctions nationwide was 2,450, up 48.3% from the previous month (1,652 cases) and a whopping 73.1% compared to the same month last year (1,415 cases).

This phenomenon is partly due to the accumulation of apartments that failed to sell because of a decline in the success rate, but it also appears to be caused by an increase in new cases entering the auction market. In January this year, the number of new apartment cases nationwide was 698, 743 in February, and in March, it surged by 450 cases from the previous month (743 cases) to 1,193 cases. It is analyzed that the number of apartments entering the auction market is increasing due to the burden of high interest rates and the continued decline in sale prices.

National Apartment Auction Index.
[Image provided by Gigi Auction]

The nationwide apartment success rate was 29.2%, down 3.9 percentage points from the previous month (33.1%). The success price rate recorded 75.1%, up 0.5 percentage points from the previous month (74.6%), and the average number of bidders decreased by 0.5 to 7.5.

By region, the apartment success rate in Seoul was 33.1%, down 3.0 percentage points from the previous month (36.1%). The success price rate also fell by 0.8 percentage points from the previous month (79.8%) to 79.0%. The average number of bidders also decreased by 2.6 from the previous month (8.0) to 5.4.

The apartment success rate in Gyeonggi Province was 30.3%, down 7.6 percentage points from the previous month (37.9%). The success price rate rose by 2.3 percentage points from the previous month (71.9%) to 74.2%, and the average number of bidders increased by 0.8 to 14.5, marking the highest number ever recorded. The rebound in the success price rate was driven by a large number of bidders competing for low-priced apartments under 100 million KRW located in the outskirts of Gyeonggi Province.

The apartment success rate in Incheon was 27.6%, up 5.2 percentage points from the previous month (22.4%). The success price rate rose by 1.8 percentage points from the previous month (66.4%) to 68.2%, but it remains the lowest nationwide. The average number of bidders decreased by 0.6 from the previous month (10.4) to 9.8.

Among the five major metropolitan cities in the provinces, only Daegu saw an increase in the success price rate. The apartment success price rate in Daegu rose by 5.8 percentage points from the previous month (67.0%) to 72.8%, after hitting a record low. Apartments priced between 100 million and 200 million KRW showed relatively strong success price rates.

The apartment success price rate in Daejeon was 70.2%, down 3.6 percentage points from the previous month (73.8%). Ulsan recorded 77.5%, down 1.0 percentage point from the previous month (78.5%), and Gwangju recorded 75.2%, down 0.3 percentage points. Busan, which has been declining every month, fell by 0.2 percentage points from the previous month (72.3%), setting a new record low once again.

Among the eight provinces, all regions except Gyeongnam and Jeju saw increases. Chungbuk (78.8%) rose by 8.8 percentage points from the previous month, Gangwon (89.9%) and Jeonnam (78.8%) increased by 5.8 and 5.5 percentage points respectively. Following these, Gyeongbuk (78.8%), Jeonbuk (79.3%), and Chungnam (77.8%) rose by 2.1, 1.5, and 0.9 percentage points respectively. Meanwhile, Gyeongnam (78.7%) fell by 0.8 percentage points.

Jeju, where 4 cases were successfully auctioned, recorded a high success price rate of 89.3%, and Sejong, with 8 successful cases, recorded 69.4%.