After Four Failed Auctions, a Villa in Banghwa-dong Ends with a Sale at 88 Million Won

[Financial News] The government is making every effort to promote the supply of non-apartment housing to stabilize the real-estate market. However, in Seoul, where housing demand is high, more villas and officetels are being pushed into auctions. Experts say policymakers must consider the reality that these properties are being shunned by the market, despite their advantage of being built relatively quickly.
■More than 20,000 non-apartment properties auctioned this year
According to data from Gigi Auction on the 2nd, the number of villas—row houses and multi-family homes—and officetels put up for auction in Seoul rose 67.8%, from 12,152 during January through August last year to 20,385 during the same period this year. By property type, villa auctions increased 58.8%, from 9,124 to 14,494, while officetel auctions surged 94.5%, from 3,028 to 5,891, nearly doubling.
The number of auction proceedings refers to the volume of properties put up for auction. A large number of non-apartment properties are being auctioned as the fallout from jeonse fraud, the concentration of demand in apartments, lawsuits seeking the return of deposits, and delinquencies on high-interest loans have converged.
The increase in auction listings can also be interpreted as evidence that demand in the sales market has weakened and these assets are failing to receive their full value. When buying demand is strong, properties can be sold at relatively high prices, allowing them to avoid auction or leading to more auctions being withdrawn.
The sale-price ratio, which measures the winning bid against the appraised value, has also shown signs of a downturn, falling below the 80% level within a year. The ratio for villas dropped 7.0 percentage points, from 83.7% to 76.7%, while that for officetels plunged 12.2 percentage points, from 84.5% to 72.3%.
In fact, a multi-family home in Banghwa-dong, Gangseo District, had an appraised value of 202 million won but was sold for about 88 million won that day. It was sold on the fifth auction attempt after failing to sell four times, resulting in a sale-price ratio of just 43.5%. An officetel in Yeongdeungpo-dong, Yeongdeungpo District, also found a new owner that day for about 161.69 million won, but its sale-price ratio was only 62.4%.
■Two out of three villas fail to sell at auction
The sale rate from January through August this year was also low, at 24.6% for villas and 21.6% for officetels, compared with 27.8% and 25.3%, respectively, last year. Two out of three villas and four out of five officetels failed to sell, underscoring how the properties are being shunned. One expert said, "Villas receive little attention even at auction unless they are properties with redevelopment potential." The expert added, "Officetels are difficult to remodel or rebuild, and whether they are counted as housing is always a variable, so there is a strong perception that they are a burden."
The government previously announced that it would support the start of construction on 130,000 non-apartment housing units in the Seoul metropolitan area by 2030 through its May 22 "Measures to Supplement Non-Apartment Housing Supply" and last month's "August 13 Plan for Rapid Housing Supply." The measures include expanding the maximum building area for multi-household and multi-family homes from 660 square meters to less than 1,000 square meters, and raising the permitted number of floors for multi-household homes from no more than three to no more than four. The government also expanded support for construction financing and project financing (PF) guarantees.
However, observers say it remains uncertain whether the measures will stabilize the market, given that housing demand is concentrated in apartments. An industry official expressed concern, saying, "In the Seoul metropolitan area, it is apartments—not non-apartment housing—that are in short supply relative to demand." The official added, "Non-apartment properties are difficult to resell and are sometimes treated as unwanted burdens, so the polarization between apartments and non-apartment housing could worsen."
[email protected] Jeon Min-kyung Reporter