"Even a 500 Million Won Jump Is Fine, Self-Residence Buyers Flock to Billion-Won Units"...High Winning Bids Continue for Mid- and Low-Priced Reconstruction Complexes [Real Estate AtoZ]

Munjeong Siyoeng 46m² Draws 40 Bidders
Over 500 Million Won Above Appraised Value... Winning Bid Rate at 164%
High-Priced Winning Bids for Small, Mid- to Low-Priced Reconstruction Complexes

The winning bid rate for Seoul apartment auctions surpassed 100% for the fourth consecutive month. As regulations on multi-homeowners have tightened, Seoul's auction market has become more focused on actual residence. This shift has led to a series of high winning bids, especially for small and mid-price complexes with reconstruction potential.

View of apartment complexes in downtown Seoul from Seoul Sky, the observation deck of Lotte World Tower in Songpa-gu, Seoul. Photo by Yonhap News

According to last month's auction trend report published on the 7th by GGI Auction, a company specializing in auction data, the winning bid rate for Seoul apartments was recorded at 101%. This represents a modest decrease of 0.7 percentage points compared to the previous month (101.7%), but the rate has remained above 100% for four consecutive months, reflecting continued strength. When the winning bid rate exceeds 100%, it means the winning bid price is higher than the appraised value. The average number of bidders was 6.1, down by 1.1 from the previous month’s 7.2.

Although the number of bidders, which indicates investment demand in the auction market, declined, the reason the winning bid rate rose is because a large number of properties priced at 1.5 billion won or below saw high winning bids. Last month, the Seoul auction market saw double-digit numbers of bidders crowding into mid- and low-priced apartments with reconstruction or remodeling potential. For example, a 46 square meter unit at Munjeong Shiyoung apartment in Munjeong-dong, Songpa-gu, attracted a winning bid of 1,312 million won—about 500 million won higher than the initial appraised value (800 million won)—resulting in a winning bid rate of 164%. This property drew a total of 40 bidders. Munjeong Shiyoung apartment is currently undergoing remodeling, and the winning bidder can inherit association member status.

A 51 square meter unit at Wolgye Miseong·Mirung·Samho 3rd complex in Nowon-gu, set to form an association, was auctioned off at a winning bid rate of 134.7% (937.99 million won). The initial appraised value was 696 million won. This complex, which benefits from major development around Kwangwoon University station and offers investment potential with price points in the billion won range, attracted strong investor demand, with 21 bidders participating in the auction. Additionally, a 50 square meter unit at Sindonga in Yangpyeong-dong, Yeongdeungpo-gu—soon to be redeveloped from 563 to 762 households due to industrial zone floor area ratio relaxation (up to 400%)—was won at a bid rate of 129.8% (1,181.99 million won). The initial appraised value was 910 million won, and there were 15 bidders.

Experts believe that for the time being, investment demand for the overall auction market will remain subdued, while small and mid-price complexes will continue to lead winning bid rates. In particular, due to the recent tax policy changes, the burden of property and capital gains taxes for non-resident single-homeowners has surged, prompting the auction market to reorganize around actual homebuyers. This is expected to further concentrate demand on “self-residence holding” in reconstruction-prone, affordable apartment complexes. Juhyun Lee, Senior Researcher at GGI Auction, explained, “Typically, during a market boom, the prices of small apartments in key locations rise rapidly. Although multi-homeowners and non-resident single-homeowners are showing less demand, the overall auction market will shrink, but high winning bids for small and mid-price complexes are likely to persist, so the winning bid rate should remain firm.”

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