Park Narae bought a house that has increased by 1.5 billion won here… Legal disputes are popping up as housing prices soar

[Captured from Channel A’s “Gold Consultation Office with Oh Eun-young”]

[Herald Economy=Reporter Park Ja-yeon] As Seoul apartment prices are rapidly rising, the auction market’s bidding rate has exceeded half. Transactions with bidding rates exceeding 100% are also frequently occurring. In cases where areas are tied by land transaction permits, it was possible to trade at bidding rates higher than the appraised value to avoid regulations, but recently, bidding rates have been surpassing the appraised value even in other areas. There is heightened interest in auctions as news of entertainer Park Narae’s house, acquired through auction, increasing by 15 billion won over the past three years, spreads.

According to the Zig Auction statistics, the auction rate for Seoul apartments last month was 50.18%, the highest since June 2022 (61.22%). In other words, when a Seoul apartment is put up for auction, about half of them are sold. Last month, there were 273 auctions, and 137 were sold through bidding.

The bidding rate, calculated by dividing the total appraised value by the total selling price, was also estimated at 91% of the appraised value. There are cases where the bidding price exceeds the appraised value. Auction bid rates have previously exceeded 100% in areas subject to land transaction permit regulations (Toheoje). Once designated as a Toheo zone, it becomes impossible to engage in speculative investments such as buying homes for rent or under lease agreements, but auction properties are exceptions. The Seoul Metropolitan Government currently designates Gangnam-gu’s Daechi, Sangseong, Cheongdam, and Apgujeong-dong, Songpa-gu’s Jamsil-dong, Yeouido-dong in Yeongdeungpo-gu, Mok-dong in Yangcheon-gu, and Seongsu-dong in Seongdong-gu as Toheo designated areas.

Auction notice is posted at the Seoul Western District Court. [Herald DB]

However, with the rise in Seoul housing prices, there are situations where the bidding prices exceed the appraised value even in non-Toheo areas. Helio City in Garak-dong, Songpa-gu, had three households auctioned on the 15th of this month, with two sold at prices higher than the appraised value. One house with 84㎡ came out at an appraised value of 2 billion won, but was sold at 2 billion 111,110,100 won, while another house with the same area was appraised at 1 billion 930 million won but was sold at 1 billion 997.799,990 won. The property also had a second bidding price in the 1 billion 980 million won range, higher than the appraised value. Seoul Forest The Shop, a 101㎡ property in Haengdang-dong, Seongdong-gu, also found a new owner at a higher price than the appraised value during an auction held on the 8th. The appraised value was 1 billion 792 million won, but it was sold at 1 billion 861,500,000 won. There were as many as 12 bidders for this property.

With Seoul apartment prices soaring, there is interest in auction properties that are relatively considered cheap. Ju Ji-hyun, a senior researcher at Zig Auction, stated, “In the case of Seoul apartments, the auction bid rate is at a higher level than before,” and “In the Gangnam area and Seongdong-gu, there is an perception that it is cheaper than regular sales, so transactions are happening quickly,” and explained, “If there are tenants, it is necessary to confirm rights related to relocation and dividend demands before participating in the bidding.”

Meanwhile, according to the Korea Real Estate Institute’s ‘Weekly Apartment Price Trends’, Seoul apartment prices in the third week of July rose by 0.28%, continuing the 17-week streak of increase. The rate of increase expanded compared to the previous week (0.24%), marking the largest increase in about 5 years and 10 months since the second week of September 2018 (0.45%).