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

According to GGI Auction on October 14, the average apartment auction winning bid rate (the ratio of the winning bid to the appraised value) in Bundang District, Seongnam City, Gyeonggi Province, has remained above 90% for four consecutive months since June. Considering the overall winning bid rate in Gyeonggi Province is 86.9%, this is about 10 percentage points higher.

원본보기 아이콘

The winning bid rate, which had dropped to the 70% range in March, broke through the 100% mark in June (101.3%) and peaked at 106.7% in August. A winning bid rate above 100% means that properties were auctioned off at prices higher than their initial appraised values.

Last month, the figure slightly decreased to 96.6%, which is analyzed to be due to an increase in the number of equity sale properties compared to the previous month. Equity sales require additional procedures such as partition lawsuits after the auction, so there is less demand and the winning bid rate tends to be lower than in general auctions. In fact, among the six properties auctioned this month, three apartments-excluding equity sales and properties without registered land rights-were successfully auctioned off at winning bid rates exceeding 100%.

Bundang District, Seongnam City, Gyeonggi Province. Yonhap News Agency

원본보기 아이콘

Panoramic view of Gam-il District, Hanam City, Gyeonggi Province. Photo by Yonhap News Agency

원본보기 아이콘

The winning bid ratio is also at a high level. Last month, Bundang District recorded a winning bid ratio of 75%, significantly higher than the Gyeonggi Province average of 38.5%. The winning bid ratio refers to the proportion of auctioned properties that are successfully sold.

In particular, there has been a series of high winning bids for older apartments, especially those with expectations for reconstruction in the first-generation new towns. Both the 135-square-meter and 186-square-meter units in Park Town, Bundang District, which is preparing for selection as a second pilot district, were auctioned off at a winning bid rate of 110% in the first auction. The 135-square-meter unit in Park Town was sold for 2.03 billion won, about 180 million won higher than the initial appraised value of 1.85 billion won. The 186-square-meter unit was auctioned off for 2.313 billion won, about 213 million won higher than the initial appraised value of 2.1 billion won.

This heated atmosphere has extended to Hanam, Gyeonggi Province. Last month, Hanam recorded an average winning bid ratio of 70% and a winning bid rate of 96.9%. The winning bid ratio, which soared to 75% in July, temporarily dropped to 54.5% in August. This was largely due to a flood of older apartment properties with less investment demand. Once these properties were cleared, both the winning bid ratio and winning bid rate recovered last month.

원본보기 아이콘

In particular, there was a significant increase in the number of auction date changes last month. From May to July, there were no changes in auction dates in Hanam, but last month alone, three cases were changed. Auction date changes occur when homeowners reach an agreement with creditors to repay debts. During periods of rising house prices, it becomes easier to sell homes and receive higher prices, leading to this phenomenon.

By property, the 85-square-meter unit in Daemyung Riverside Town, Hanam City, attracted 15 bidders. This property had failed to sell once, causing the minimum winning bid price to drop to 70%, but in the second auction, it was sold for 796 million won, with a winning bid rate of 100.1%. For the 75-square-meter unit in Gamill Centreville, Hanam, the property was auctioned off at a winning bid rate of 105% (about 942 million won).

Experts interpreted that the fact that the auction market does not shrink despite the government's strong loan regulations means that the market's expectations for rising house prices are high.

Even after the June 27 loan regulations and the September 7 measures, despite restrictions on securing auction balance through household loans and loans for sales businesses, the bid rate and success rate are recording significantly high figures.

Researcher Lee Juhyun said, "During the real estate boom in 2021, the nationwide auction winning bid ratio was around 70-80%. Currently, the winning bid ratios in Bundang and Hanam are at high levels," adding, "The fact that both the winning bid rate and winning bid ratio have not declined significantly despite government measures indicates that market expectations for rising house prices remain strong."

원본보기 아이콘