Seoul Real Estate Auctions Booming

The sizzling housing market attracted more than 7 trillion won in court-auctioned real estate in the metropolitan area this year.

According to Digital Taein, an auction information provider, the number of court-auctioned real estate sales in the metropolitan area was 139,900 this year, with 7.222 trillion won in total contract prices. Last year saw 37,000 more real estate auctions in the metropolitan area, but total winning bid prices increased by 668.9 billion year-on-year. This year’s total contract price in the metropolitan area was the highest since the company first compiled statistics in 2000, making up 53% of 13.6 trillion won in nationwide contract prices.

“Would-be home buyers who couldn’t purchase houses in the normal real estate market came to the court auction market. If this trend continues, this year’s total contract price of real estate auctioned in the metropolitan area will reach 7.5 trillion won,” said Lee Yeong-jin, CEO of Digital Taein.

Apartments accounted for the biggest proportion of sold real estate in metropolitan area auctions with total contract price of 1.785 trillion won. Buildings with stores had the second biggest share of 1.652 trillion won.

The total contract price of tenement and multi-household houses auctioned by the court was 418.2 billion won in 2002, but soared to 1.324 trillion this year due to expectations of reconstruction and redevelopment.

Auctioned lands were not popular last year since capital gains taxes were increased by the government’s real estate policy announced August 31, 2005. However, a number of land development plans raised land prices, attracting 961.3 billion won this year, the highest since 2001 (1.109 trillion won).

Residential real estates, including apartments, were particularly preferred in the auction market.

The average ratio of bidding price to appraised value of apartments rose from 83.17% to 90.91% year-on-year and their contract rate was 39.52% this year, up from 35.05% last year.

Tenement and multi-household houses had an 82.91% average ratio of bidding price to appraised value this year, up from 67.69% last year. Contract rates for them went up from 31.81% last year to 41.17% this year.

The total contract price of auctioned residential houses including apartments, tenement and multi-household houses was 3.5482 trillion won, accounting for 49.1% of sold real estates which were auctioned in the metropolitan area.

“Homebuyers showed keen interest in auctioned real estate as home prices soared despite a number of government real estate measures to cool down the housing market. This auction boom is expected to continue next year,” said Park Won-gap, vice president of online real estate information provider SpeedBank.

sukim@donga.com