Apartments Hold Up, but Non-Apartment Properties Flash Warning Signs... Auction Listings Have Increased 5.8-Fold in Four Years

[Financial News] The polarization between apartments and non-apartment properties in Seoul's housing market is becoming increasingly evident in the auction market as well. Apartments have shown relatively resilient performance, while auction inventory for non-apartment properties has rapidly accumulated and price indicators have weakened, according to an analysis.
According to GG Auction on the 29th, the number of auction proceedings involving non-apartment properties in Seoul—including multifamily homes, row houses, detached homes, multi-household homes and officetels—totaled 21,005 from January through August this year. That was a 48.9% increase from the 14,107 cases recorded during the same period last year. The number of completed sales also rose 41.3%, from 3,630 to 5,128.
Price indicators, by contrast, fell sharply. Seoul's sale price-to-appraisal ratio for non-apartment properties stood at 72.75% from January through August this year, down 6.64 percentage points from 79.39% during the same period last year. It was the lowest level since 2022. This means non-apartment properties put up for auction were selling, on average, at just over 70% of their appraised value. The sale rate also declined 1.32 percentage points, from 25.73% last year to 24.41% this year.
Auction inventory for non-apartment properties is building rapidly. From January through August, the number of auction proceedings jumped from 3,643 in 2022 to 7,925 in 2023, more than doubling. It then increased to 12,760 in 2024, 14,107 last year and 21,005 this year. Compared with 2022, the figure has grown about 5.8-fold in four years.
As inventory has increased, sale prices have also trended lower. From January through August, the sale price-to-appraisal ratio fell from 86.70% in 2022 to 76.08% in 2023, a decline of more than 10 percentage points. It recovered somewhat to 76.85% in 2024 and 79.39% last year, but dropped again to 72.75% this year. The ratio is 13.95 percentage points lower than in 2022, showing that weakness in price indicators has become more pronounced as auction inventory accumulates.
The market sees the gap between non-apartment properties and apartments widening. According to GG Auction's "August Auction Market Trends Report," the winning bid-to-appraisal ratio for Seoul apartments was 97.0% in August, down 4.0 percentage points from the previous month. However, the ratio exceeded 100% in areas with a high share of mid- to lower-priced apartments, such as Jungnang-gu and Nowon District.
Even within Seoul's housing market, bidding demand continues for apartments, where demand is relatively solid. Non-apartment properties, meanwhile, are absorbing the increased auction inventory at lower prices. Compared with the sale price-to-appraisal ratio for non-apartment properties falling to the low 70% range, the gap with apartments is even more apparent in price indicators.
Experts say the vulnerability of non-apartment properties is becoming more evident in the auction market as the burden of loans has accumulated since the period of high interest rates and housing demand in Seoul has become concentrated in apartments.
Ham Young-jin, head of Woori Bank's Real Estate Research Lab, said, "Apartments in Seoul and the greater capital area are holding up to some extent in terms of sale rates and sale price-to-appraisal ratios, but non-apartment properties are different." He added, "The increase in auction inventory for non-apartment properties should be viewed as a kind of warning sign."
However, Ham said, "Because the supply of non-apartment properties itself is declining, it is difficult to say that an increase in auction inventory will immediately lead to a sharp price drop." He added, "We need to monitor the trends in auction inventory and sale price-to-appraisal ratios together for the time being."

[email protected] Choi A-young Reporter