Byeoksan Live Park Draws 34 Bidders
Some Properties Exceed 100% of Appraised Value
Average Number of Bidders Surpasses Double Digits
"Upward Trend Expected, Reflected First in Auction Market"
#On the 25th, an 85㎡ unit in Junggye Kumho Town, Nowon-gu, Seoul, which was put up for court auction, found a buyer at 745.9 million KRW. The final bid price was 48.9 million KRW higher than the appraised value (697 million KRW), recording a bid rate of 107%. This price is higher than the recent actual transaction price (72.5 million KRW on February 26). The recent transaction was for a low-floor unit (2nd floor), while the auctioned unit was mid-floor (9th floor), which could explain the price difference. However, it is considered unusual for the bid price to exceed the actual transaction price.
#On the same day, 34 bidders competed for a 59㎡ unit in Byeoksan Live Park, Mia-dong, Gangbuk-gu, Seoul. This apartment was sold at 532.28 million KRW, about 98% of the appraised value (542 million KRW). The property had been auctioned once unsuccessfully, dropping the minimum bid price to 80%, but attracted many bidders and was sold at nearly 100 million KRW above the minimum price.
The court auction prices in the Nodobang area (Nowon, Dobong, Gangbuk) are rising sharply. It is becoming common for bid prices to exceed actual transaction prices or to be formed at 20 percentage points higher than the minimum bid price. This sudden phenomenon has appeared amid the recent lifting and re-designation of the Land Transaction Permission System (LTPS), leading to speculation that the LTPS balloon effect might be spreading to Nodobang as well.
According to Gigi Auction on the 30th, 27 apartment auctions were held at the Northern District Court in the Nodobang area this month. Among them, 11 cases, accounting for 41% of the total, were sold at prices exceeding the previous unsuccessful bid prices. In auctions, the initial bid is at the appraised value, and each time the property fails to sell, the minimum bid price drops by 20% of the appraised value. The average bid rate (bid price compared to appraised value), which hovered around the 80% range last year, surged to 90.2% this month.
Average Number of Bidders in Double Digits... Nodobang Auction Prices Rise
On the 25th, an 85㎡ unit in Hyundai Green Apartment, Junggye-dong, Nowon-gu, changed hands at 562 million KRW, which is 80% of the appraised value (704 million KRW). This apartment had seen two unsuccessful auctions, dropping the minimum bid price to 64% of the appraised value before the sale. On the same day, a 59㎡ unit in Dream Forest SK View, Wolgye-dong, Nowon-gu, was sold at about 710.99 million KRW, 80% of the appraised value (884 million KRW). The minimum bid price for this property was 64% of the appraised value.
Although bids must exceed the minimum price to win, it is rare for the final bid price to be more than 15 percentage points above the minimum. Kang Eun-hyun, head of the auction research center at Myungdo Law Firm, explained, "It is uncommon for auction items with a minimum bid price as low as 64% of the appraised value to have a bid rate exceeding 80%. Raising the bid price by 20 percentage points above the minimum usually occurs when there is a strong desire to secure the property or when there is an expectation that prices will rise."
The average number of bidders has exceeded double digits. In March, the average number of bidders participating in apartment auctions in the Nodobang area was 10.2, 1.5 times higher than the previous month (6.7). This is the first time the figure has reached double digits since September 2023 (13 bidders), 1 year and 6 months ago.
In fact, on the 25th, 15 bidders competed for a 53㎡ unit in Sindonga Apartment, Banghak-dong, Dobong-gu. This apartment had two unsuccessful auctions, lowering the minimum bid price to 64% (257.92 million KRW) of the appraised value, but was sold at 78% (313.11 million KRW) of the appraised value (403 million KRW).
The atmosphere has changed compared to earlier this year when the average number of bidders was in the single digits. In January alone, the average number of bidders in the Nodobang area was only 4.3.
Is This the LTPS Balloon Effect? Opinions Also Point to the Impact of February Regulation Lifting
There is an analysis that the balloon effect caused by the re-designation of the LTPS is spreading. It is believed that expectations of rising housing prices in non-regulated areas have been reflected first in the auction market. The two properties were auctioned one day after Seoul City re-designated the LTPS on the 19th and implemented it on the 24th. The auction market is considered a leading market ahead of the general sales market.
Kang said, "The reflective benefits from the expanded implementation of the LTPS seem to have partially influenced the Nodobang auction market. Although the March auction market is not as affected as adjacent areas like Mapo-gu and Seongdong-gu, it suggests that Nodobang is not a safe zone from the LTPS balloon effect."
There is also an opinion that the housing price surge that began after the LTPS was lifted in February has spread to the Nodobang area. Lee Joo-hyun, senior researcher at Gigi Auction, said, "It may be premature to say that the balloon effect appeared immediately after the LTPS expansion designation, but it seems that the housing price rise that started after the regulation lifting last month has affected Nodobang as well."
Experts predict that the auction market's heat could extend to the sales market in the future. Researcher Lee said, "Nodobang was an area that did not see much price rebound even at the recovery point after a downturn. Although the implementation of the stress DSR (Debt Service Ratio) in July is a variable, the auction market's heat could potentially spread to the sales market in the long term."
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