Last month, the number of apartment auctions nationwide reached its highest level in seven months, but the Seoul auction market exhibited a different trend. While the number of properties increased across the country, Seoul saw a decline in auction activity, although both the bid rate and the bid price ratio rebounded. The market for large apartment complexes valued at 1.5 billion won or less attracted significant interest, allowing Seoul's auction market to recover to a 100% bid rate following a correction in March.
According to the April Auction Trends Report released on May 8 by the auction data firm Zigy Auction, the number of apartment auctions nationwide was 3,409, an increase of about 8% from 3,167 in the previous month. This marks the highest monthly total since September of last year, when there were 3,461 auctions.
The national bid rate for apartments rose to 35.7%, up 0.8 percentage points from 34.9% the previous month. However, the bid price ratio fell to 87.0%, down 0.3 percentage points from 87.3% in March. Although the number of auction properties increased, the bid prices relative to appraised values decreased slightly, indicating that a widespread price recovery is not yet evident.
In contrast, Seoul's auction market showed different dynamics. The number of apartment auctions in Seoul last month was 152, a decrease of about 6% from 161 in March. However, the bid rate increased to 48.7%, up 5.2 percentage points from 43.5% the previous month, reaching its highest level since November of last year, when it was 50.3%.
The bid price ratio in Seoul also returned to above 100%, rising to 100.5%, an increase of 1.2 percentage points from 99.3% in March. This marks the end of a three-month decline. Zigy Auction noted that the decrease in available auction properties in Seoul, coupled with a higher proportion of first-round sales, contributed to the rise in the bid rate.
This rebound should be viewed in the context of a market that has seen fluctuations following a strong start to the year. The bid price ratio for Seoul apartments exceeded 100% for four consecutive months from October last year to January this year. After a slowdown in February and March, when it dipped to 99.3%, it recovered to above 100% in April. This suggests that bidders are selectively targeting properties that meet specific criteria within the auction market.
Notably, large apartment complexes valued at 1.5 billion won or less have driven this trend. Regionally, the bid price ratio in Gangdong-gu surged to 105.5%, an increase of 9.9 percentage points from the previous month, while Guro-gu saw a rise to 99.6%, up 7.2 percentage points. The demand appears to be concentrated on properties that meet financing capabilities, size, and location criteria, rather than a broad increase in demand for high-priced properties.
The concentration on properties valued at 1.5 billion won or less may also be influenced by loan regulations. The Financial Services Commission has differentiated mortgage limits for housing purchases in the metropolitan area and regulated zones based on property prices. For homes valued at 1.5 billion won or less, the limit is 600 million won; for those between 1.5 billion and 2.5 billion won, it is 400 million won; and for homes over 2.5 billion won, it is 200 million won. In auctions, the ability to utilize post-auction financing becomes a key factor influencing bidding decisions.
Regulations in designated land transaction areas also operate differently in the auction market compared to general sales. Under the Real Estate Transaction Reporting Act, auctions conducted under civil execution law are exempt from land transaction approval requirements. While general sales face burdens from approval and residency requirements, auctions bypass these procedures. However, unique variables such as rights relationships and post-auction financing conditions complicate direct comparisons with the general sales market.
Among individual properties, a 84.9-square-meter apartment in Sin-gil-dong, Yeongdeungpo-gu, attracted the highest number of bidders, with 29 participants. This property was sold for 1.2 billion won, which is 109.1% of its appraised value of 1.1 billion won. The highest bid was for a hospital in Seocho-gu, which sold for 29.17889 billion won, or 83.0% of its appraised value of 35.15514 billion won.
An industry insider commented, "In Seoul, when there are not many auction properties available, large complexes valued at 1.5 billion won or less tend to attract bidders easily. The interplay of financing capacity, land transaction regulations, and property-specific rights relationships makes it difficult to explain trends solely based on the general sales market."
* This article has been translated by AI.
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