"Let's Win the Bid Even If It's More Expensive Than Market Price"... Heated Auction Market

Bidding Frenzy in the 'Naejipmaryeon' Craze... Winning Bids Exceed Appraised Values
Last Month, Seoul and Metropolitan Area Apartment Court Auction Success Rates Hit Record Highs

[Asia Economy Reporter Tae-min Ryu] The court auction winning bid rate for apartments in Seoul and the metropolitan area reached an all-time high last month. This is interpreted as an increase in demand from buyers seeking to purchase homes through auctions amid soaring apartment prices last year. In particular, some areas saw multiple bidders, resulting in winning bids higher than market prices.

According to court auction specialist company Gigi Auction on the 2nd, the winning bid rate for Seoul apartments in March was 112.2%. The winning bid rate refers to the ratio of the winning bid price to the appraised value; for example, an apartment appraised at 100 million KRW was sold for 112.2 million KRW. This winning bid rate is the highest since the company began compiling statistics in 2001. It is 12.3 percentage points higher than last month's 99.9%.

The winning bid rate for apartments in the entire metropolitan area also hit a record high of 109.2% last month. The metropolitan area apartment winning bid rate has exceeded 100% for six consecutive months since October last year.

As the winning bid rate soared, some apartment auction winning bids exceeded market prices, showing signs of overheating. On the 30th of last month, an 84.9㎡ (exclusive area) apartment in Dalbitmaeul 1 Complex, Hwajeong-dong, Deogyang-gu, Goyang-si, Gyeonggi Province, was sold for 671 million KRW, about 80% higher than the appraised value of 375 million KRW. This amount is 40 million KRW higher than the highest market price for that area, 630 million KRW (February). In Jugong 4 Complex, Ichung-dong, Pyeongtaek-si, a 46.7㎡ apartment attracted 51 bidders at once and was sold for 212.88 million KRW, 68% higher than the appraised value of 127 million KRW.

This enthusiasm appears to be because buyers burdened by soaring housing prices are flocking to auctions in search of relatively cheaper properties. Jang Geun-seok, team leader at Gigi Auction, explained, “As the sales market has become active recently, the number of properties entering auctions has decreased, but the number of people participating in the auction market, which is considered relatively inexpensive, is increasing. Demand is rising while supply is decreasing, so naturally, the winning bid rate is going up.”

On the other hand, last month, the winning bid rate for multi-family and row houses in Seoul fell by 9.9 percentage points from 93.1% to 83.2%. The metropolitan area also dropped from 82.5% to 73.3%. Team leader Jang said, “It seems that the popularity of villas in auctions has sharply declined due to stricter criteria for priority allocation rights for union members in public projects.”

This content was produced with the assistance of AI translation services.