Seoul Apartment Auction Winning Bid Rate Hits 4-Year High as Investors Turn to Auctions to Avoid Land Transaction Regulations [Real Estate AtoZ]

Seoul's Average Auction Winning Bid Rate Reaches 97.3% in 2023
Seoul Surpasses 100% Auction Winning Bid Rate for Three Consecutive Months

Last year, the auction winning bid rate for apartments in Seoul reached its highest level since 2021. As land transaction permit zone regulations expanded to cover the entire city, investment demand shifted to auctions.

Apartment complexes in the Seongdong District. Photo by Yonhap News Agency

According to GGI Auction on January 4, the average auction winning bid rate for Seoul apartments last year (the ratio of winning bid to appraised value) was 97.3%, the highest in four years since 2021 (112.9%).

In particular, the auction winning bid rate for Seoul apartments in December exceeded 100% for the third consecutive month, marking the highest level since June 2022. In 2021, when housing prices surged, the auction winning bid rate for Seoul apartments surpassed 100%, but as prices fell, the rate dropped to an average of 82.5% in 2023, then rebounded to 92.0% in 2024. Last year, it rose again by 5.3 percentage points.

Despite strong government lending restrictions such as the June 27 measures, the continued rise in housing prices fueled the auction market. With the October 15 measures, the entire city of Seoul was designated as a land transaction permit zone. As auctions do not require transaction approval from district offices and allow for gap investments, investors flocked to the auction market.

The number of apartment sales transactions in Seoul (based on contract date) exceeded 8,000 in both September and October last year, but sharply declined after the October 15 measures, dropping to 3,283 in October and 2,786 in November (excluding canceled transactions). In contrast, the auction winning bid rate rose from 99.5% in September to 102.3% in October, and then surpassed 100% for three consecutive months through December. The auction winning bid rate in December was 102.9%, the highest in three and a half years since June 2022 (110.0%).

As the auction market overheated, the auction success rate (the ratio of successful bids to total auctions) also increased. Out of 2,333 properties auctioned in court last year, nearly half-49% (1,144 properties)-were successfully bid on, the highest since 2021 (73.9%). The average number of bidders per property was 8.19, the highest in eight years since 2017 (8.72).

By district, the concentration on apartments in the Gangnam area and the Hangang Belt was particularly notable. Out of Seoul’s 25 districts, nine recorded auction winning bid rates above 100%, with Seongdong District leading at 110.5%. Seongdong District also ranked first in annual apartment price growth by district last year. It was followed by Gangnam District at 104.8% and Gwangjin and Songpa Districts at 102.9%. Yeongdeungpo (101.9%), Dongjak (101.6%), Jung (101.4%), Mapo (101.1%), and Gangdong (100.7%) Districts also exceeded 100%.

Among the top 10 apartment complexes by auction winning bid rate, most were located in the three Gangnam districts and the Hangang Belt. The highest winning bid rate last year was for a 60-square-meter unit in Doosan Apartment, Geumho-dong 3-ga, Seongdong District, Seoul, auctioned on November 24. After competition among 40 bidders, it was sold for 1.3375 billion won, which is 160.2% of the appraised value of 835 million won.

The second highest was a 106.5-square-meter unit in Miseong Apartment, Apgujeong-dong, Gangnam District, Seoul, auctioned on September 30 last year, which was sold for 5.20822 billion won-over 1.8 billion won higher than the appraised value of 3.4 billion won. The winning bid rate was 153.2%. On December 1, a 60-square-meter unit in Cheonggu Gangbyeon Apartment, Seongsu-dong 2-ga, Seongdong District, was auctioned for 2.755 billion won, which is 150.6% of the appraised value of 1.829 billion won, driven by the positive outlook for the Seongsu Strategic Redevelopment Zone.