Housing Prices 'Leading Indicator' Auction Market Booming... Nationwide Apartment Winning Bid Rate Hits All-Time High

Over 100% Nationwide for 8 Consecutive Months... Average Winning Bid 106.7% of Appraised Value in August
Record High Winning Bid Rates for Apartments in Seoul Metropolitan Area Including Gyeonggi and Incheon
Bidders Flock Amid Housing Price Rise Expectations... Winning Bids Exceeding 1.5 Times Appraised Value Frequently Occur

[Asia Economy Reporter Ryu Tae-min] The auction market is overheating amid the relentless rise in housing prices. Last month, the average winning bid rate for apartment auctions nationwide hit an all-time high, with the winning bid rates in the Incheon and Gyeonggi regions also reaching record highs. The winning bid rate, considered a leading indicator of the housing market, has exceeded 100% nationwide for eight consecutive months since January this year, and for 7 and 12 consecutive months in Incheon and Gyeonggi, respectively.

According to Gigi Auction, a court auction specialist company, the average winning bid rate for apartments nationwide in August was 106.7%, up 5.7 percentage points from 101.0% in the previous month. This is the highest since the company began compiling statistics in 2001. The winning bid rate refers to the ratio of the winning bid price to the appraised value. For an apartment appraised at 100 million KRW, a winning bid rate of 106.7% means it was sold for 106.7 million KRW. Since surpassing 100% in January this year, the nationwide apartment winning bid rate has steadily increased, continuously breaking records.

The winning bid rate for Seoul apartments in August also rose by 9.3 percentage points from the previous month to 116.3%, marking the second-highest record ever. The winning bid rate for Seoul apartments has been on the rise since the beginning of the year, reaching an all-time high of 119% in June. The Gyeonggi and Incheon regions show even more pronounced increases. The winning bid rate for apartments in Gyeonggi has exceeded 100% for 12 consecutive months, and in Incheon for 7 consecutive months. Last month, the rates were 115.1% and 123.9%, respectively, both record highs.

Some apartment auction winning bids have exceeded the appraised value by more than 1.5 times, indicating signs of overheating. An 84.78㎡ (exclusive area) apartment in Line Apartment, Deungchon-dong, Gangseo-gu, Seoul, was auctioned on the 24th of last month for 973.89 million KRW, more than 1.6 times the appraised value of 580 million KRW. This amount is about 100 million KRW higher than the highest price in the general sales market just before, which was 880 million KRW. This property attracted 36 bidders.

An apartment of 60㎡ in Jinmal Samhwan Hanjin Apartment, Janggok-dong, Siheung-si, Gyeonggi, which had 31 bidders, was auctioned on the 10th of last month for 403 million KRW. This winning bid was 1.7 times higher than the appraised value of 237 million KRW and close to the previous highest sales price of 437 million KRW.

Experts analyze that the continued record-high prices in the auction market, considered a leading indicator of the sales market, signal that housing prices will continue to rise in the future. Professor Shim Gyo-eon of Konkuk University's Department of Real Estate explained, “In major metropolitan areas such as Seoul, the current supply is insufficient, and the expectation that housing prices will rise further is reflected, leading to increased demand in the auction market.” Senior researcher Lee Joo-hyun of Gigi Auction said, “Due to the recent consecutive rises in housing prices, the asking prices in the sales market are very high, so the auction market, which is perceived as a relatively cheaper way to purchase, has gained popularity, causing the winning bid rate to rise significantly.”

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