Aerial view of Gangnam residential area (image: Flickr, Francisco Anzola (fran001))
Foreclosure Auction (image: Flickr, by The-Lane-Team (Colleen Lane))
SEOUL, July 19 (Korea Bizwire) – As the downturn in the real estate market deepens, more and more homeowners give up their houses after failing to make monthly mortgage payments. The number of apartment houses out for public sale in the Seoul metropolitan area has hit a 13 year high. According to Taein, a real estate consulting firm, on July 18, the number of homes put up for sale in Seoul and surrounding areas was 17,653, the highest level since 2000 when the comparable figure was 18,005.
What’s problematic is the fact that the banks may find themselves in trouble as a higher number of houses on the market may depress auction prices. The average bidding price in the first half was 77.4 percent of the appraised value, slightly higher than 74.2 percent in 2012. Most real estate industry experts warned, however, this is a temporary “optical illusion” because the rise was largely due to speculative bidding by opportunistic investors.
Kang Eun-heon, director of EH Auction Center, said, “It is highly likely the public sale price for foreclosed houses will decline more in the latter half. That’s because more supply of homes will naturally bring down prices. The expiration of tax holiday on home purchases will further depress the market.”
