An apartment in Seoul, known as 'Jubjub' for its unranked bidding, has been put up for public auction after failing to find an owner despite multiple rounds of bidding. It was not sold even after a price cut of 100 million won during the first auction held in March, leading to a re-auction after five months. There are forecasts that it will be difficult to find an owner in this auction as the real estate market has turned cautious following the announcement of the real estate loan regulations on June 27.
According to KB Real Estate Trust on the 13th, bidding for 74 units of the 'Hwagok The Reeve Sky' apartment located in Hwagok-dong, Gangseo-gu, Seoul, will take place on the 18th of this month. The starting bid is between 300 million and 500 million won. If it fails to attract buyers for the fifth time, the price will drop to between 100 million and 300 million won.
'Hwagok The Reeve Sky' is a total of 140 apartment units that were first offered in November 2022, but about half of the units remain vacant. This apartment has conducted unranked bidding up to the 18th round but failed to find an owner. Ultimately, 'Hwagok The Reeve Sky' was handed over to the public auction in March. However, despite the continuous failures in the auction, the price dropped by more than 100 million won but still could not find an owner.
'Hwagok The Reeve Sky' is set for a re-auction after five months, but the market environment to address the vacancy is not favorable. After the deregulation of land transaction approval zones in the first half of this year, the real estate market in the metropolitan area has been freezing again due to tightened loan regulations. With the mortgage limit set at 600 million won and the application of the third phase of the debt service ratio (DSR) regulation, transactions in the low-priced apartment market have also decreased. According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, the number of transactions for apartments priced below 600 million won last month was 801, a 49.4% decrease compared to the same period last year.
Notably, the initial bidding price for this apartment is about 100 million won higher than the previous auction's final price of 200 million to 400 million won. It is anticipated that in future auctions, initial bids will have to be placed higher than the appraised price, making it difficult for bids to be won in the early stages of the auction.
There is talk in the real estate market about 'Seoul's invincibility,' but the emergence of cases where apartments in Seoul are put up for public auction due to unsold units is analyzed as a result of 'separating the wheat from the chaff.' As regulations on multiple homeowners continue, the 'one solid unit' phenomenon persists, leading to a decline in demand for investments in products that have poor locations and marketability, even among apartments in Seoul.
Kim Hyo-sun, a senior official in real estate at NH NongHyup Bank, noted, 'The current real estate market is not one that simply buys properties because they are cheap,' explaining, 'Transactions are taking place mainly for those guaranteed regarding location and price.'