March Winning Bid Rate 83.9%, Up 7.2%P in One Month
Winning Bid Ratio Recovers from 9.8% in February to 13.6% in March
Increased Investment Demand in Public Redevelopment and Reconstruction Projects
Top Winning Bid Rate Villas in Sintong Planning and Moa Town Project Areas
# Last month, a court auction for a multi-family house located in Hongje-dong, Seodaemun-gu, Seoul attracted as many as 15 bidders. Despite being a small house with a net area of 34.4㎡ (about 10 pyeong) and located on a low floor, it was sold at 228.42 million KRW, which is 162% of the appraised value (141 million KRW).
# In the same month, a 16-pyeong multi-family house in Sangdo-dong, Dongjak-gu, Seoul was sold at auction for 461.4 million KRW. With 10 bidders competing, it was sold at a price 112.4 million KRW (132.2%) higher than the appraised value (349 million KRW).
The Seoul villa (multi-family and row houses) auction market, which had frozen last year due to reverse jeonse and jeonse fraud, is warming up. In particular, the winning bid rate recorded the highest level in 16 months. It is analyzed that investment demand is flowing into the auction market due to the promotion of public redevelopment and reconstruction projects such as Shintong Planning (Shintonggihoek) and Moa Town.
According to Gigi Auction, a specialized company in auction and public sales data, the winning bid rate for Seoul villas in March was 83.9%, up 7.2 percentage points from 76.7% in the previous month. It had stayed in the 70% range from December last year to February this year but rose back to the 80% range after four months. This is the highest level in 1 year and 4 months since November 2022 (84.9%). The winning bid rate refers to the ratio of the winning bid price to the appraised value.
The winning bid ratio also showed signs of recovery. The winning bid ratio for Seoul villas increased by 3.8 percentage points from 9.8% (116 out of 1,182 cases) in February to 13.6% (143 out of 1,048 cases) in March. This means that fewer than 10 out of 100 villa auction items were sold, but last month more than 10 items were sold.
The average number of bidders also increased from 2.79 to 3.78 during the same period. However, although the winning bid ratio slightly increased compared to the first half of last year (lowest 8.1%), it is still low compared to 2020-2021 (22.5-43.28%) before the jeonse fraud issue emerged.
Experts explain that public maintenance projects promoted by the Seoul Metropolitan Government, such as Shintong Planning and Moa Town, are leading the recovery of the villa auction market. Lee Joo-hyun, a senior researcher at Gigi Auction, said, "Due to expectations from the selection of Shintong Planning and Moa Town target sites, more people are investing in auction properties," adding, "The small amount of investment is not a big burden, and if the project proceeds in earnest, it is advantageous because you can sell with a premium."
In fact, more than half of the top 10 villas in Seoul by winning bid rate last month were located in redevelopment and reconstruction project areas such as Shintong Planning and Moa Town. The S villa in Hongje-dong, Seodaemun-gu, where Moa Town is being promoted, was sold on the 12th of last month at 228.42 million KRW, 162% of the appraised value (141 million KRW), ranking first in winning bid rate. The H villa in Mia-dong, Gangbuk-gu, selected as a redevelopment candidate site for Shintong Planning, was sold at 115.16 million KRW, 145.8% of the appraised value (79 million KRW), ranking second. Auction items of H villa and S villa in Sangdo-dong, Dongjak-gu, where Shintong Planning has been confirmed, showed winning bid rates of 132.2% and 109.3%, ranking 4th and 7th respectively.
A representative of a real estate agency in Hongje-dong said, "The selection of the Moa Town project site is seen as a great windfall," adding, "Currently, the area designation is being prepared, and the market price rises each time the project progresses one step."
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