162 Seoul Apartment Auctions in November → 281
"Unable to Cover Loan Interest, Leading to Auctions"
Due to the prolonged high interest rates, the number of houses put up for auction in the Seoul metropolitan area in November increased by more than three times compared to a year ago. It is interpreted that the number of properties going to auction has increased as homeowners could not bear the high loan interest.
On the 2nd, according to auction and public sale data company Gigi Auction, the number of apartment auctions conducted in Seoul last month was 281, an increase of 119 cases compared to 162 cases in the previous year. During the same period, Incheon saw an increase of 76 cases to 207, and Gyeonggi Province had 670 apartment auctions, up 349 cases.
Not only apartments but also non-apartment auctions such as officetels and villas showed an increasing trend in the number of properties. Last month, the number of residential officetel auctions conducted in Seoul was 202, which is 138 more than 64 cases in the same period last year, reaching about three times the amount. In Incheon (218 cases) and Gyeonggi (166 cases), the numbers increased by 125 and 89 cases respectively. In villa auctions, Seoul recorded 1,405 cases, 705 more than 700 cases a year ago, while Incheon (492 cases) and Gyeonggi (928 cases) increased by 224 and 450 cases respectively.
As the number of properties for sale increased, the winning bid rate remained in the 20% range. Among the 281 apartment auctions conducted in Seoul last month, only 80 were successfully bid, recording a winning bid rate of 28.50%. The winning bid rate was 44.00% in January at the beginning of the year but dropped to about half that level. As the winning bid rate declines, the backlog of auction properties is expected to increase further.
The popularity of apartment auctions itself is not as strong as before. On the 6th of last month, a 196.76㎡ unit in Jangmi Apartment, Sincheon-dong, Songpa-gu, Seoul, was sold at auction for 3,133.13 million KRW, about 73 million KRW higher than the appraised value (3,060 million KRW), recording a winning bid rate of 102.40% (the ratio of winning bid price to appraised value). A few months ago, apartments slated for reconstruction attracted demand and recorded winning bid rates of 110-120%, but this has slightly decreased.
Senior researcher Lee Joo-hyun of Gigi Auction said, "Considering that this property has reconstruction issues, the winning bid rate was not as high as expected," adding, "It can be seen that buyer sentiment has somewhat cooled."
The decline in winning bid rates and winning bid prices in the auction market is believed to be due to increased burden on buyers as high interest rates persist. Researcher Lee said, "Recently, there is a general trend of increasing properties entering auctions," and "It seems that more homeowners who cannot afford loan interest due to high interest rates are coming out due to debt relationships."
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