Accumulating Auction Properties Due to High Interest Rates and Falling House Prices... Gyeonggi Apartments Reach Highest in 8 Years

November Jiji Auction Bidding Trend Report

Due to prolonged high interest rates and falling housing prices, apartment auction listings are piling up nationwide. The number of apartment auctions nationwide increased by about 50% compared to a year ago, with Gyeonggi apartments recording the highest number in over eight years. While the supply of listings is overflowing, the number of buyers is low, leading to a simultaneous deterioration in auction indicators such as success rates and bid-to-appraisal ratios.

According to the ‘November 2023 Auction Trend Report’ released on the 9th by Gigi Auction, a data specialist in public auctions, the number of apartment auctions nationwide last month reached 2,829 cases. This is a 7.6% increase from 2,629 cases in the previous month and a significant 48.6% increase compared to 1,904 cases in the same month last year. A Gigi Auction official explained, "This appears to be due to the simultaneous increase in new auction cases and failed auctions caused by the burden of high interest rates and weakened buying demand."

The success rate dropped by 2.0 percentage points from 39.8% in the previous month to 37.8%, and the bid-to-appraisal ratio fell by 3.3 percentage points from 84.1% to 80.8%, marking a halt to the rising trend after seven months and turning downward. The average number of bidders decreased by 0.3 to 6.0.

By region, the number of apartment auctions in Seoul was 281 cases, showing an increasing trend every month since May. The success rate rose by 2.0 percentage points from 26.5% in the previous month to 28.5%, but still remained at a low level in the 20% range. The bid-to-appraisal ratio dropped by 6.0 percentage points from 86.7% in the previous month to 80.7%.

A Gigi Auction official said, "Even the Gangnam 3 districts?Gangnam, Seocho, and Songpa?that had driven the rise in bid-to-appraisal ratios have contracted, causing a sharp decline in the overall bid-to-appraisal ratio for Seoul apartments." The average number of bidders also decreased by 0.3 from 5.8 in the previous month to 5.5.

The number of apartment auctions in Gyeonggi was 670 cases, setting a new record for the highest number of auctions in 8 years and 7 months since April 2015 (697 cases). The success rate increased by 3.8 percentage points from 39.5% in the previous month to 43.3%. The bid-to-appraisal ratio fell by 3.1 percentage points from 85.2% to 82.1%, ending a six-month upward trend. The average number of bidders decreased by 0.3 from 8.4 to 8.1.

The number of apartment auctions in Incheon was 207 cases, a 28.6% increase from 161 cases in the previous month. The success rate dropped by 2.4 percentage points from 39.1% to 36.7%, and the bid-to-appraisal ratio also fell by 1.0 percentage point from 82.1% to 81.1%. A Gigi Auction official stated, "The resumption of sales procedures for rental fraud victim houses in Michuhol-gu, Incheon, which were sold at low prices, affected the overall decline in the bid-to-appraisal ratio." The average number of bidders decreased by 1.3 from 8.7 to 7.4.

Among the five major metropolitan cities in the provinces, only Daejeon saw an increase in the apartment bid-to-appraisal ratio. Daejeon's bid-to-appraisal ratio rose by 2.6 percentage points from 84.6% in the previous month to 87.2%, recording the highest figure nationwide. Gwangju recorded 79.1%, down 6.4 percentage points from 85.5% in the previous month, falling below 80% again after six months. Daegu (83.7%) and Ulsan (81.8%) fell by 2.4 and 1.5 percentage points, respectively. Busan (78.2%) also dropped by 0.3 percentage points from the previous month.

Among the eight provinces, the apartment bid-to-appraisal ratio in Gyeongnam (77.1%) rose slightly by 0.5 percentage points from 76.6% in the previous month. The largest decline was in Jeonnam (69.5%), which fell by 10.3 percentage points from 79.8%, marking the lowest point since July 2014 (69.0%). Chungnam (76.1%) dropped by 5.5 percentage points from 81.6%, and Gangwon (82.2%) and Chungbuk (82.9%) each fell by 4.2 percentage points. Jeonbuk (79.6%) decreased by 1.4 percentage points, and Gyeongbuk (83.3%) by 1.0 percentage point.

Jeju apartments, with 10 out of 19 cases sold, recorded a bid-to-appraisal ratio of 84.5%, while Sejong, with 5 out of 16 cases sold, recorded 79.2%.