The number of properties entering foreclosure has skyrocketed, reaching levels not seen in over a decade. (Image courtesy of Yonhap)
SEOUL, Aug. 6 (Korea Bizwire) – In a stark reversal of fortune for South Korea’s once-booming real estate market, the number of properties entering foreclosure has skyrocketed, reaching levels not seen in over a decade.
According to government data released on August 4, July saw 13,631 applications for the commencement of voluntary auction registration for real estate properties.
This marks a 24.1% increase from June’s 10,983 cases and a staggering 46.1% jump from the 9,328 cases recorded a year ago.
The figure represents the highest number of such applications since July 2013, when 14,078 cases were registered.
Analysts attribute this surge to the aftermath of South Korea’s real estate boom, during which many buyers stretched their finances to the limit – a practice colloquially known as “yeong-kkeul,” or “scraping together everything including one’s soul” – to purchase properties.
As economic conditions have shifted, these homeowners are now struggling to meet their mortgage obligations.
Voluntary auctions occur when borrowers who used real estate as collateral fail to repay either the principal or interest on their loans.
In such cases, creditors, typically financial institutions, can initiate an auction to recover their funds. Unlike forced auctions, voluntary auctions can be initiated immediately without going through separate court proceedings.
Generally, lenders may file for auction after about three months of delinquency.
The increase in voluntary auctions has been particularly pronounced for multi-unit buildings such as apartments, officetels (studio apartments), multi-family homes, and commercial complexes.
In July, there were 5,484 applications for such properties, a 54.6% increase from the 3,547 cases a year ago.
This figure is 2.4 times higher than the 2,290 cases in July 2022 and marks the highest number of applications since November 2010, when 5,717 cases were recorded.
Regionally, Gyeonggi Province led with 1,639 cases, followed by Busan with 759 and Seoul with 639.
Within Seoul, Guro District had the highest number of voluntary auction applications at 195, followed by Gwangjin District with 41 and Gangseo District with 39.
M. H. Lee (mhlee@koreabizwire.com)
