Bundang Below Heaven, Hanam Below Bundang... "Reconstruction Likely" Drives Booming Auction Market for Older Apartments [Real Estate AtoZ]

Bundang, Winning Bid Rate Exceeds 90% for Four Consecutive Months
Hanam Sees Rise in Auction Date Changes
Auction Market Overheats Despite Tightened Settlement Loans

As housing prices in Seoul have surged and the real estate market in Seongnam and Hanam in Gyeonggi Province has also heated up, investment demand is pouring into the court auction market. As buyers seek to invest in promising areas of Gyeonggi Province at lower prices than in Seoul, the auction success rate has even exceeded 100% in some cases.

Bundang Sees High Auction Prices for 'Park Town' Apartments Amid Reconstruction Hopes... Auction Success Rate Exceeds 90% for Four Consecutive Months

According to GGI Auction on October 14, the average apartment auction success rate (the ratio of the auctioned price to the appraised value) in Bundang-gu, Seongnam, Gyeonggi Province, has remained above 90% for four consecutive months since June. This is about 10 percentage points higher than the overall auction success rate in Gyeonggi Province, which stands at 86.9%.

The auction success rate, which had dropped to the 70% range in March, surpassed 100% in June (101.3%) and peaked at 106.7% in August. A success rate above 100% means that the property was auctioned off at a price higher than its initial appraised value.

Last month, the figure slightly decreased to 96.6%, but this is analyzed to be due to an increase in the number of partial ownership sales. Partial ownership sales tend to have lower demand and success rates compared to regular auctions, as buyers must go through additional procedures such as partition lawsuits after winning the bid. In fact, out of six properties auctioned this month, three apartments-excluding those involving partial ownership and unregistered land rights-were auctioned off at success rates exceeding 100%.

The auction closing rate is also at a high level. Bundang-gu recorded a closing rate of 75% last month, significantly higher than the Gyeonggi Province average of 38.5%. The closing rate refers to the proportion of auctioned properties that are actually sold.

In particular, high auction prices have been recorded for older apartments in first-generation new towns with reconstruction potential. Both the 135-square-meter and 186-square-meter units in Park Town, Bundang-gu, which is preparing for selection as a second pilot district, were auctioned off at 110% of their appraised value in the first round. The 135-square-meter unit was auctioned for 2.02999 billion won, about 180 million won higher than its initial appraisal of 1.85 billion won. The 186-square-meter unit was auctioned for 2.313 billion won, about 213 million won higher than its initial appraisal of 2.1 billion won.

Hanam Approaches 100% Auction Success Rate... Increase in Auction Date Changes

This heated atmosphere has spread to Hanam, Gyeonggi Province. Last month, Hanam recorded an average auction closing rate of 70% and a success rate of 96.9%. The closing rate, which soared to 75% in July, temporarily dropped to 54.5% in August, largely due to an influx of older apartments with lower investment demand. Once these properties were absorbed, both the closing rate and success rate recovered last month.

Notably, the number of auction date changes increased significantly last month. From May to July, there were no auction date changes in Hanam, but in September alone there were three. Auction date changes occur when homeowners reach an agreement with creditors to repay their debts. During periods of rising home prices, it becomes easier to sell and fetch higher prices, leading to such trends.

Looking at individual properties, the 85-square-meter unit in Daemyung Riverside Town, Hanam, attracted 15 bidders. This property was once unsold, causing the minimum auction price to fall to 70%, but in the second auction it was sold for 796 million won, with a success rate of 100.1%. In the case of the 75-square-meter unit in Gamill Centreville, Hanam, it was auctioned off at a success rate of 105%, or about 942 million won.

Experts interpret the fact that the auction market remains active despite the government's strict lending regulations as evidence of strong market expectations for rising home prices. Even after the June 27 lending restrictions and the September 7 measures, which imposed limits on securing balance payments through household loans and on loans for real estate business operators, both the auction success rate and closing rate have remained significantly high.

Researcher Lee Juhyun stated, "During the real estate boom in 2021, the national auction closing rate was around 70-80%. The current rates in Bundang and Hanam are at a high level," adding, "The fact that both the auction success rate and closing rate have not declined significantly despite government measures indicates that market expectations for rising home prices remain strong."