Last month, 40% of the 10 collective buildings sold through voluntary auctions in Seoul had been on the market for over two years. This trend is attributed to a surge in long-term auction properties hitting the market due to high interest rates, coinciding with rising housing prices in Seoul and a robust auction market.
According to the Court Registration Information Center on August 19, 680 collective buildings across the country took more than two years from the initiation of voluntary auction proceedings to the application for ownership transfer registration. This marks a 30% increase from 523 in May. Of the 2,703 collective buildings for which sales registration was applied last month, 25.2% had been on the market for over two years.
In particular, the sale of long-term auction properties has been concentrated in Seoul. The number of collective buildings sold in voluntary auctions in Seoul that had been on the market for over two years rose from 36 in May to 63 in June, and then to 110 in July, a 3.1-fold increase in just two months.
The proportion of long-term properties has also significantly increased. Last month, a total of 264 collective buildings were registered for sale in Seoul, with 41.7% of them having been on the market for more than two years. This is up from 14.9% in May and 32.0% in June, marking a rise of 9.7 percentage points in just one month to surpass 40%.
In contrast, the figures for Gyeonggi Province and Incheon were much lower, at 17.6% and 14.5%, respectively, highlighting a regional disparity within the metropolitan area. The increase in long-term auction property sales has not been evenly distributed across the metropolitan area but has been primarily focused in Seoul.
This trend is seen as a result of a surge in auction properties, coupled with rising housing prices in Seoul and a recovery in auction demand, leading to the sale of properties that had been tied up for an extended period. According to real estate data firm Zigy Auction, the successful bid rate for apartments in Seoul last month reached 101.0%, exceeding 100% for the fourth consecutive month.
The Court Registration Information Center reported that in July 2024, there were 5,484 collective buildings for which voluntary auction proceedings were initiated, a 54.6% increase compared to the same month last year. This is the highest number recorded in 13 years and 8 months since November 2010. Some of the properties that surged during that period have recently been sold due to delays in case processing and personal rehabilitation, which extended the auction procedures.
Analysts suggest that the rise in housing prices in Seoul has incentivized some debtors to delay auctions. While a personal rehabilitation application does not automatically halt an auction, the court can suspend or prohibit auction procedures if deemed necessary for the execution of collateral rights.
If housing prices rise during the suspension of an auction, the likelihood of properties being sold at higher prices upon resumption increases. This means that after paying off secured debts and senior claims with the sale proceeds, any remaining assets would also increase for the debtor. However, it is difficult to ascertain the specific reasons for delays or the status of personal rehabilitation based solely on registration statistics.
Kang Eun-hyun, head of the Law Firm Myungdo Auction Research Institute, stated, "In areas like Seoul where housing prices are rising, some debtors are taking advantage of the institutional limitations of court practices to delay auctions. There have been several cases where properties that were successfully bid on in 2024-2025 were not sold due to personal rehabilitation and were re-auctioned, resulting in increased competition and bid prices rising by several million won compared to previous sales."
* This article has been translated by AI.
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