In February this year, the successful bid rate at court auctions for Seoul apartments (winning bid as a percentage of appraised value) turned downward.
According to GGAuction, a corporations specializing in auction and public auction data, the successful bid rate at Seoul apartment auctions in February was 101.7%.
The successful bid rate for Seoul apartment auctions rose for two consecutive months from 101.4% in November last year to 102.9% in December and 107.8% on Jan., then fell 6.1 percentage points (p) last month.
In the fourth week of Feb. (23–27), the successful bid rate at Seoul apartment auctions was 97.2%, below 100%.
This appears to reflect increased listings in the sales market as President Lee Jae-myung continued real estate-related messages aimed at owners of multiple homes.
However, due to the Lunar New Year holiday last month, the number of Seoul court auction proceedings fell sharply to 97, compared with 174 the previous month.
The success rate, which represents the ratio of successful bids to auctions held, was 45.4%, rising for the past two months (Dec. last year 42.5%→Jan. this year 44.3%→Feb. 45.4%).
The average number of bidders also increased for two months (6.7→7.9→8.1), to 8.1.
It is interpreted that the auction market is drawing attention as a "niche market" for purchasing dwellings after the government designated all of Seoul as a land transaction permit zone (TLPZ) under the Oct. 15 measures last year.
When an area is designated as a TLPZ, a two-year owner-occupancy requirement applies and buyers must obtain approval from the competent authority when purchasing a dwelling. However, if a dwelling is won through auction, the land transaction permit system does not apply, there is no owner-occupancy requirement, and "gap investment" (purchasing with a jeonse tenant in place) is possible.
If a winning-bid balance loan, similar to a mortgage loan, is not used, the six-month move-in registration requirement introduced in the June 27 measures also does not apply.
With Seoul apartment prices continuing to rise, it is assessed that among dwelling buyers there is a growing perception that using auctions can avoid such regulations.