Buying a 1 billion won apartment for 700 million won… Confused common people flocked together

House prices in Seoul have risen for 5 weeks… Sales prices are also skyrocketing.
Real consumers flock to auctions, and the number of items for sale increases significantly
A house worth 1 billion won is sold for 700 million won… “Opportunity to own a home”

As housing prices in Seoul rebounded again, consumers who had been watching the housing price trend fell into confusion. As pre-sale prices are also rising, an increasing number of consumers are turning their attention to the auction market, where they can purchase homes at prices lower than the market price.

According to the Korea Real Estate Agency on the 26th, apartment prices in Seoul have risen for five consecutive weeks. The rate of increase is also gradually increasing. Seoul house prices, which began to rebound by rising 0.01% last month, rose 0.03% in the fourth week of this month. House prices have risen 0.12% over the past 5 weeks.

Looking at the numbers alone, it may seem like a small increase, but considering the Korea Real Estate Board’s rate of change standard, it is a number that cannot be ignored. This is because the price of some apartments traded over the past five weeks has risen, meaning that the overall market capitalization of Seoul apartments has increased by 0.12%.

In individual apartments, reports are being made everywhere. The exclusive 126.02㎡ unit of ‘Mokdong New Town Complex 9’ in Sinjeong-dong, Yangcheon-gu was traded for 2.2 billion won on the 23rd, setting a new record price. On the 16th, a 105㎡ unit exclusively for the ‘Hyundai 13th’ in Apgujeong-dong, Gangnam-gu also broke the reported price at 4.34 billion won, and a 97㎡ unit exclusively for Acro Seoul Forest in Seongsu-dong, Seongdong-gu was also traded at a reported price of 4.35 billion won on the 3rd.

As trading volume increases, the theory of a rebound is gaining ground in the market. At the Seoul Real Estate Information Plaza, the number of apartment sales in Seoul in March was 3,964. This is the highest transaction volume since August 2021, when there were 4,065 transactions. Considering that the transaction reporting deadline remains, it is expected that last month’s transaction volume will exceed 4,000. This is a significant increase compared to the 2,500 cases in January and February of this year.

The threshold for subscription, which was the main means of purchasing a home, is also increasing. This is because sales prices are continuing to skyrocket. As of last month, the average selling price per m2 for small apartments (60 m2 or less) in Seoul was 11.43 million won, a 20.5% increase compared to 9.49 million won in the same month last year. Small and medium-sized apartments (exclusively over 60㎡ ~ 85㎡ or less) also rose 16% in the first quarter of this year compared to last year.

In addition to rising prices, supply is also decreasing. Last year, housing starts in the Seoul area amounted to 21,000 households, which was only 32.7% of the annual average. Permission for 26,000 households and completion for 27,000 households were only 37.5% and 42.1% of the annual average, respectively.

The Korea Research Institute for Human Settlements, a national research institute, said in a report titled ‘Analysis of Housing Supply Situation and Stable Housing Supply Strategy’ that the performance (licenses) compared to Seoul’s housing supply implementation plan for 2023 is only 32%, so a housing supply shortage may become a reality in 2-3 years. I was concerned that there was.

As housing prices and sales prices rise simultaneously, interest in auctions as a more affordable way to purchase a home is increasing. According to the March Auction Trend Report by GG Auction, a company specializing in auction and public auction data, the average number of bidders last month was 9.7, an increase of 1.1 from the previous month. This is the highest figure since January 2001, when GG Auction began collecting related statistics.

Although the number of bidders has increased, the price is not rising easily. This is the result of a significant increase in the number of apartments put up for auction by banks after their owners fail to repay their loans. The number of apartment auctions in Seoul last month was 261, more than double the 126 in March last year. As the number of items for sale increased, the successful bid rate was 35.3%, down 3 percentage points from the previous month, and the successful bid price to appraised price ratio increased only 1.4 percentage points compared to the previous month, reaching 85.1%.

Auctions are an opportunity for homebuyers to purchase a home at a lower price than the market price. Ko Jun-seok, head professor at Yonsei University’s Sangnam Institute of Management, said, “The appraised value at auction is determined to be between 90-95% of the market price,” and “Successful at 85% of the appraised price means that an apartment with a market price of 1 billion won was sold at an average of 760 million won at auction.” He explained.

Apartments that have recently been auctioned off also appear to be priced lower than the market price. The exclusive 84㎡ unit of ‘DMC Park View Xi’ in Namgajwa-dong, Seodaemun-gu was sold for 1.068 billion won last month, and the actual transaction price this month was 1.24 billion won.

An 84㎡ unit dedicated to ‘Jamsil Els’ in Jamsil-dong, Songpa-gu was also sold for 2.23999 billion won this month. The recent actual transaction price is 2.38 billion won. In the case of a general sale, a real estate brokerage fee is added to the actual transaction price, but since auctions do not go through a brokerage house, there is no brokerage fee.

Auctions are very attractive in terms of price, but the barriers to entry are relatively high, including the need to analyze rights and go through a transfer process after winning a bid. Regarding this, Professor Ko Jun-seok said, “Many people find auctions difficult because the related laws are focused on creditors. If you focus on the information you need to know from an investor’s perspective and develop an eye for selecting good properties, you will have the opportunity to buy your own home easily and inexpensively.” “It will happen,” he advised.

Oh Se-seong, Hankyung.com reporter [email protected]