[Report] "Crowds Gathered but Bidding Freezes"... Seoul Housing Auctions Cool Down

Visiting Seoul Nambu District Court Auction Room: Only 40 out of 100 Bidders Participate
Low Minimum Sale Prices Fail to Attract Bids... 6 Bids out of 41 Items
Decline in Bidders Leads to Reduced Winning Rates for Apartments and Villas

On the morning of the 8th, participants are checking the list of auction items at the Southern District Court auction courtroom in Sinjeong-dong, Yangcheon-gu, Seoul. (Photo by Hwang Seoyul)

[Asia Economy Reporters Tae-min Ryu, Seo-yul Hwang] "These days, even buying a house through auction feels burdensome. With the economy not doing well and taxes being high, it's hard to find properties that can yield capital gains." (Corporate investor Mr. Lee, in his 40s)

As the real estate market cools down recently, a growing wait-and-see attitude is also emerging in the Seoul housing auction market, which is considered a leading indicator. The consecutive interest rate hikes and strengthened loan regulations have increased buyers' burdens, leading to a decline in investment demand.

On the morning of the 8th, over 100 people gathered at the Southern District Court auction courtroom in Sinjeong-dong, Yangcheon-gu, Seoul. Due to social distancing measures, there were not enough seats, and some had to stand while watching the auction process. However, only 39 bidders participated until the bidding closed. A total of 48 items were up for auction that day, of which 41 were residential properties such as multi-family houses and apartments. Despite many of these having minimum sale prices at only 40-60% of the appraised value, making the entry barrier low, only 10 items found new owners.

The real estate auction market enjoyed an unprecedented boom until the end of last year, but recently, a cold wave has hit apartments and villas alike. According to Gigi Auction, a court auction specialist company, the winning bid rate for Seoul apartments soared to 77.4% in August last year but dropped to 48.6% last month. The winning bid rate, which indicates the ratio of the winning bid price to the appraised value, also fell from a record high of 119.9% in October last year to 103.1% last month.

The situation is similar in the Seoul villa market. The average winning bid rate reached 97.9% in September last year, marking the highest in 13 years and 1 month, but has since declined to 92.1% last month. The number of bidders in the Seoul villa auction market also decreased from 427 in November last year to 240 last month, a drop of 187 (43.7%) in two months. The winning bid rate also fell to the 20% range for two consecutive months, recording 22.5% in December last year and 23.1% last month, down from 31.4% in September last year.

Senior researcher Joo-hyun Lee of Gigi Auction explained, "It appears that investment demand targeting development prospects has turned cautious recently, leading to decreases in winning bid rates and winning bid ratios. However, since mid-to-low priced housing has relatively lower prices and is less affected by loan regulations, actual resident demand remains relatively healthy."

This sentiment was also evident among participants in the current auction. Mr. Lee, a man in his 40s who attended the auction that day, said, "Due to the tax burden on multi-homeowners for general housing, I recently shifted my investment focus to commercial properties that can generate rental income." Another investor in his 50s, Mr. A, said, "This is my third time visiting the auction courtroom to look for investable housing properties, but I gave up bidding because there was nothing that caught my eye."

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