Jamsil Apartment Auctions Defy Loan Restrictions,Fetch Prices Above Appraisal Value
Seoul,South Korea – Despite newly enforced restrictions on business loans impacting the real estate market,recent auctions for apartments in the Jamsil district of Seoul have yielded unexpectedly high winning bids,in some cases exceeding appraisal prices by significant margins. The results signal a potential divergence in market behavior, particularly for high-value properties, even as overall auction participation is expected to decline.
On September 13th, an 84㎡ unit in the ‘Lisentz’ complex in Jamsil-dong, Songpa-gu, was sold at auction for 3.36999 billion won – 879.99 million won above the appraised value of 2.49 billion won. This represents a winning bid price 135% of the appraisal. A total of 27 bidders competed for the property, one of Jamsil’s “El, Lee, and Temple” major complexes. The winning bid was only approximately 70 million won below the highest price recorded for the complex last month (3.44 billion won).
Also on September 13th, an 84㎡ unit in the Jamsil-dong Hyundai Apartment sold for 1.65 billion won, 118% of its 1.4 billion won appraisal value, after competition from 13 bidders.
These results are considered unusual given the recent tightening of loan regulations in the Seoul metropolitan area. According to Support Auction data,the apartment bidding rate in Seoul last month - following the implementation of loan restrictions on June 27th – fell to 40.3%, the lowest rate recorded this year. In the Gangnam 3-gu districts (Gangnam, Seocho, and Songpa-gu), the bidding rate dropped to 18.8%, also a year-low.
“The Gangnam area has ‘smart’ demand, and high-priced apartments are relatively unaffected,” explained Lee Joo-hyun, a senior researcher at Jijidi Auction.
The changes stem from new regulations impacting business loans, a common funding source for corporations and private business owners participating in auctions.Previously, Loan-to-Value (LTV) ratios were 30% in regulated areas and 60% in non-regulated areas. As of September 8th, LTV has been reduced to 0% in regulated areas and the metropolitan area.
Market analysts predict a potential decrease in demand for properties priced around 1 billion won. “In Seoul, Gyeonggi, and Incheon, except for Gangnam 3 districts, the winning bids are likely to be lowered and the competition rate is likely to fall for the time being,” stated Kang Eun-hyun, director of the Myeongdo Auction Research Institute.
