Apartments in Seoul are increasingly selling at auction for more than their appraised value, with the trend concentrated in outlying districts such as Nowon. The share of such sales in Nowon has risen more than sixfold in a year, and a similar pattern has emerged in Gangbuk. In the Gangnam area, by contrast, the number of apartments sold above appraised value has fallen by about half — evidence that the district-by-district divide seen in the resale market is now showing up at auction as well.
An analysis of auction listings compiled by GG Auction, a court auction data provider, showed that of 62 apartments sold at auction in Seoul's Nowon District from January through September this year, 30, or 48.4%, went for at least their appraised value, the firm said on the 27th. In the same period last year, only eight of 104 winning bids, or 7.7%, cleared that threshold. The number of such sales rose 3.8 times over the year, while their share increased 6.3 times.
The pattern has grown more pronounced in the second half of this year. In Nowon, the share of sales above appraised value rose to 45.0% in the second quarter and 58.3% in the third, from 38.9% in the first. That means roughly six of every 10 apartments sold at auction in the third quarter found buyers at a price exceeding the appraisal.
Individual cases across Nowon show wide premiums. In July, a unit in the Mireung, Miseong and Samho apartment complex in Wolgye-dong sold for about 938 million won ($650,000), or 242 million won above its appraised value of 696 million won. The winning bid came to 134.8% of the appraisal, and 21 bidders took part. In August, a 58-square-meter unit in Sanggye Jugong Complex 6 found a buyer at 813 million won, 167 million won above its 646 million won appraisal, with 12 bidders. Elsewhere, winning bids topped appraisals by more than 20% at Junggye Mujigae (128.9%), Junggye Green (121.8%) and Wolgye Hyundai (121.6%). High bid-to-appraisal ratios have appeared not only in Sanggye-dong and Wolgye-dong, where aging complexes slated for rebuilding are clustered, but also in Junggye-dong.
The same trend is evident in neighboring Gangbuk District. Of 17 apartments sold at auction there from January through September, five, or 29.4%, went above appraised value. A year earlier, just one of 29 winning bids, or 3.4%, did so. The number of such sales rose fivefold in a year, and their share climbed 26.0 percentage points. In July, an 85-square-meter unit in Doosan We've Trezium in Mia-dong drew 12 bidders and sold for 990.11 million won, about 100 million won above its 890 million won appraisal. Last month, an 85-square-meter unit in Kkumeuisup Lotte Castle in Mia-dong sold for 989.6 million won, or about 110% of its 900 million won appraisal.
In Dobong District, the share of sales above appraised value also rose, to 17.1% this year from 11.3% last year. On Sept. 29, a 79-square-meter unit in Changdong Jugong Complex 3 sold for 923.65 million won, about 176 million won above its 748 million won appraisal, one of several cases in which winning bids exceeded appraisals by more than 20%.
The Gangnam area told a different story. The number of winning bids at or above appraised value in Gangnam District fell to 14 in the January-September period this year from 29 a year earlier, a drop of more than half. Because total winning bids also fell, to 27 from 56, the share of such sales was little changed at 51.9%, compared with 51.8%. In Seocho District, the number of above-appraisal sales fell 60%, to four from 10, and their share of all winning bids dropped 14.8 percentage points, to 22.2% from 37.0%. Weakness at the top end is visible elsewhere, too. Last month, large ultra-high-end apartments including Trimage in Seongsu-dong, Seongdong District, and the Sambu complex in Yeouido-dong, Yeongdeungpo District, sold for about 70% of their appraised value, dragging down the average bid-to-appraisal ratio for Seoul apartments overall.
The divide at auction reflects the burden of financing purchases under lending and tax rules, analysts said. As buyers need more of their own capital to acquire expensive apartments, demand is shifting to lower-priced outlying districts of Seoul. "Since the government announced its tax overhaul, concern over heavier tax burdens has cooled buying of ultra-high-end apartments at auction, while districts with a high share of mid- and low-priced apartments have stayed strong," an official at GG Auction said.