Because of the push to overhaul the tax code to increase the holding tax burden on high-priced dwellings, a chill is sweeping the apartment auction market for units appraised at more than 3 billion won. Unlike the overheated trend in mid- to low-priced apartment auctions, successful bid rates are falling and auctions are being repeated without bids.
According to GGAuction, a court auction specialist, on the 13th, the 146.7-square-meter exclusive-use apartment at Sambu Apartment in Yeouido-dong, Yeongdeungpo-gu, Seoul, failed to attract a bid again in the second-round auction on Aug. 25.
This apartment is a representative redevelopment complex in Yeouido. After it was first put up for bid in July with an appraised value of 5.083 billion won and failed to attract a bid, a second-round auction was held last month at a minimum price of 4.0664 billion won, but there were no bidders. A third-round auction is scheduled for the 30th of this month with a minimum price of 3.25312 billion won.
Industry officials cite the government's tax overhaul as the cause, noting that urgent sales of high-priced apartments have increased and prices have turned downward. Lee Joo-hyeon, a senior analyst at GGAuction, said, "For this property, the transfer of association member status is allowed, and there are no issues with rights relations such as senior-ranking tenants, but it was appraised high right before the Oct. 15 policy package was announced last year, when prices were at their peak, and repeated auction failures appear to have occurred as asking prices and actual transaction prices fell together after the recent tax overhaul announcement."
Trimage in Seongsu-dong, Seoul, which went to bid on the 7th, was awarded in the third round after two failures, at a final price in the 5.873 billion won range. That is 79.5% of the initial appraisal value. In addition, in areas such as Gangnam and Yongsan-gu, one failed first-round auction has become the norm for high-priced apartments. Apartments appraised in the 2 billion–3 billion won range, including Daerim·Hangaram in Ichon-dong, Yongsan-gu, and Woolim Pilyou in Hangangno 3-ga, all failed in their first-round auctions last month and earlier this month.
Accordingly, the successful bid rate for high-priced apartments has also fallen. According to GGAuction, the successful bid rate for high-priced apartments appraised at 3 billion won or more was 125.3% in January this year and 109.7% in May, but fell to 90.0% and 90.9% in July and August, respectively.
This contrasts with auctions for mid- to low-priced apartments on the outskirts of Seoul, which are drawing crowds of bidders and seeing a flurry of high winning bids. The 58.6-square-meter exclusive-use unit at Shindonga Apartment in Yongdu-dong, Dongdaemun-gu, which went to bid on the 19th of last month, was awarded at 903.99 million won, 132% of its 695 million won appraisal, after 17 people competed. The 59.8-square-meter exclusive-use unit at Shinnae Apartment in Shinnae-dong, Jungnang-gu, drew 16 bidders and found a buyer at 775.2 million won, 128.8% of its 602 million won appraisal.