Lining Up With Cash to Buy: "2.8 Billion → 3.4 Billion" Surge in High-Priced Apartment Auction Wins in Seoul [Real Estate AtoZ]

Winning Bid Rates Exceed 100% in First Auctions
DH Zai Gaepo Auction Prices Surpass Actual Transactions
Investment Demand Rises as Multi-Homeowner Tax-Saving Listings Decline

As recently as last month, the Seoul auction market was dominated by mid- to low-priced apartment complexes priced below 1.5 billion won. However, demand for high-priced apartment auctions is now surging once again. Analysts attribute this to the disappearance of listings that had been put on the market ahead of the end of the temporary capital gains tax relief for multiple homeowners, prompting investment demand to flow into the auction market.

Seoul apartments viewed from Namsan. Photo is not related to the specific content of the article. Photo by Yonhap News Agency

According to the auction industry on June 20, there have been a series of cases this month where high-priced apartments worth over 2 billion won were successfully auctioned off at their first attempt, with winning bids exceeding 100% of the appraised value, without any prior failures.

For example, a 129 square meter unit in the Olympic Athletes' Village in Bangi-dong, Songpa District, found a buyer on June 15 for approximately 3.47378 billion won, about 600 million won higher than the initial appraisal price of 2.79 billion won. The winning bid ratio was 124.51%, with as many as 12 bidders vying for the property. Similarly, a 121.7 square meter unit in Bangbae Lotte Castle Arte was auctioned off on June 10 for 3.1721 billion won. The initial appraisal price for this property was 3.09 billion won, resulting in a winning bid ratio of 102.66%.

Some properties have even surpassed their actual transaction prices. For instance, a 76.5 square meter unit in DH Xi Gaepo in Gangnam District was auctioned off for 3.632 billion won on June 10. The initial appraisal price was 3.13 billion won, resulting in a winning bid ratio of 116.04%. This price is higher than the most recent actual transaction price of 3.55 billion won recorded in September last year and also exceeds the highest asking price on the market (3.6 billion won).

This stands in stark contrast to the auction market last month, where high winning bids were mostly concentrated in mid- to low-priced complexes below 1.5 billion won. Last month, there were nine successful auctions for high-priced apartments worth over 2 billion won at Seoul District Courts. Of these, six failed to exceed a winning bid ratio of 100%.

All six of these properties went through one failed auction before being sold at their second auction attempt. For example, a 144.4 square meter unit in Samsung Onet in Gangnam District was sold for 2.137 billion won, lower than its initial appraisal price of 2.57 billion won, resulting in a winning bid ratio of 83.15%. Similarly, an 85 square meter unit in Hangang Daewoo in Ichon-dong, Yongsan District, was sold for 2.6683 billion won, about 230 million won lower than its initial appraisal price of 2.85 billion won.

In contrast, investment demand was heavily concentrated in mid- to low-priced complexes below 1.5 billion won. Of the top 10 properties with the highest winning bid ratios last month, all but one were priced under 1.5 billion won. For example, a 23 square meter unit in Sungkyung Apartment in Ichon-dong, Yongsan District, was auctioned off for 1.06 billion won, recording a winning bid ratio of 189.9%.

The renewed demand for high-priced apartment auctions this month appears to be driven by the decrease in tax-saving listings from multiple homeowners. Previously, ahead of the end of the temporary capital gains tax relief for multiple homeowners, many high-priced apartments were rushed to market, but as these listings have now been absorbed or withdrawn, investment demand is shifting to relatively affordable auction properties.

Jihyun Lee, Senior Researcher at GGI Auction, commented, "At the beginning of this year, the influx of multiple-homeowner listings temporarily dampened demand for high-priced apartment auctions. However, as such listings have recently dwindled, we are now seeing a trend where investment demand is moving back into the auction market. Due to the effects of the land transaction permit system, there is a time lag before price changes in the sales market are reflected in actual transaction statistics, which could result in auction winning prices pushing up actual transaction prices during this gap."

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