At a real estate auction held at the Incheon District Court on the 12th of last month, the hottest item was a 74㎡ (exclusive area) apartment on the 6th floor of Geomdan Kumho Eoullim Central Apartment in Won-dang-dong, Seo-gu. This apartment attracted 55 bidders and was sold for 570 million KRW, about 100 million KRW higher than the appraised value of 476 million KRW. The second highest bid for this property also exceeded 550 million KRW, indicating fierce competition.
Recently, the apartment auction market in Incheon and Gyeonggi areas has been picking up again. Bidders are flocking mainly to low-priced apartments that are less affected by high interest rates, causing the winning bid rates to rise accordingly. Additionally, as the metropolitan area apartment sales market turns upward, investment demand is gradually recovering.
According to Gigi Auction, a court auction specialist company, the average winning bid rate for apartments in Gyeonggi last month was 75.9%. This is 1.4 percentage points higher than the previous month, marking the highest figure this year. The average winning bid rate for apartments in Incheon last month was 74.8%, which is 8.4 percentage points higher compared to the 66.4% recorded in February. The winning bid rate refers to the ratio of the winning bid price to the appraised value. For example, a winning bid rate of 75.9% means that an apartment appraised at 100 million KRW was sold for 75 million KRW.
The average number of bidders per property is also increasing rapidly. The average number of bidders for apartment auctions in Gyeonggi in the first half of this year was 11.98, the highest since the statistics began in 2001. This is even higher than the 11.75 bidders recorded in the first half of 2020, when the real estate auction market was very active. In Incheon, the average number of bidders in the first half of this year was 9.28, the highest in three years since 12.87 bidders in the first half of 2020.
Looking at actual winning bid cases, a 49.7㎡ apartment in Jueun Punglim Apartment, Yongdu-ri, Gongdo-eup, Anseong-si, Gyeonggi, attracted 48 bidders when auctioned on the 19th of last month. This property was sold for 177.77 million KRW, 16.1% higher than the appraised value. On the 29th of last month, a 74.9㎡ unit in The Sharp Incheon Sky Tower, Dohwa-dong, Michuhol-gu, Incheon, attracted 35 bidders and recorded a winning bid rate of 94.7%.
The revival of winning bid rates is driven by low-priced apartments appraised at 600 million KRW or less. An analysis of the top 10 apartments with the highest winning bid rates sold in Gyeonggi and Incheon last month shows that only three properties were sold for more than 600 million KRW. Among these, only one complex exceeded 1 billion KRW, and all the top five complexes were priced at 600 million KRW or less. This suggests that investment demand is concentrated on low-priced apartments that are relatively less affected by high interest rates.
Furthermore, the apartment sales market in Incheon and Gyeonggi has also turned upward recently, raising expectations. According to the Korea Real Estate Board, apartment prices in Incheon have been rising for eight consecutive weeks since turning upward in the third week of May. In Gyeonggi, prices have risen for three consecutive weeks since the third week of last month.
Lee Joo-hyun, a senior researcher at Gigi Auction, explained, “As repeated auction failures lowered the minimum bid prices, the number of bidders increased mainly for low-priced apartments less affected by interest rate hikes. Although it is still too early to say the market has turned upward, the decline has stopped and the market is showing signs of recovery.”
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