[비즈한국] 10:00 AM on the 18th. The interior of the Seoul Southern District Court, where the auction tribunal is held, was packed with people. There were 89 items up for auction today. From people filling out bid forms and taking notes on bidding information to those constantly checking auction documents while on the phone, the atmosphere was distinctly different from a regular courtroom. There were quite a few young people who looked to be in their 20s. Could the rumors that the real estate auction market was struggling be false?
For about an hour, I talked to people and asked them "what property they came to bid on." I noticed something strange. Although the 150-seat courtroom was full once the session began, only a handful of people had actually come with the intent of "winning a bid." There were people there to study, representatives from real estate auction firms, loan shark company officials, and students from real estate auction academies. On this day, the judge called out the "Korea Housing & Urban Guarantee Corporation" as the winning bidder more than anyone else.
A real estate company official who came to see which properties were being sold explained, "Most people here aren't here to bid. There are many properties failing to find buyers these days. Many of the listings are from jeonse fraud cases or have been transferred over from loan shark companies." A head of a real estate auction academy also said, "There are many students here. Not many people came with the actual purpose of making a bid."
Auction Applications from Non-Banking Financial Institutions Increase
A noticeable change has occurred in the real estate auction market recently. While new listings have increased, the bid success rate has fallen. Experts analyze that this is because more people are unable to repay their mortgage loans. Some are even raising alarms that the real estate market could collapse.
According to the court, the number of real estate properties for which auction sales are requested annually is increasing. A voluntary auction is where a creditor, such as a bank, disposes of a debtor’s collateral (real estate) through an auction to recover funds. The number rose from 87,812 in 2020 to 105,614 in 2023, and surged by 27% year-on-year in 2024 to reach 134,526.
Voluntary auction listings originating from secondary and tertiary financial sectors have also increased. In the list of creditors—that is, those requesting voluntary auctions—one can easily find not only secondary financial firms but also the names of loan shark companies such as "OO Capital." According to GG Auction, the number of residential properties for which loan shark companies have requested auctions has been on an annual upward trend, recording 1,202 cases in 2021, 1,565 in 2022, and 2,534 in 2023.
‘Danger’ Signs in the Real Estate Market
It appears that the number of properties where individuals who took out excessive loans to purchase homes are failing to repay those loans has grown. Lee Ju-hyun, a senior researcher at GG Auction, analyzed, "It is true that the number of auction requests from places like loan shark companies has increased. 2021 was the period when loan shark companies provided the most loans. At that time, apartment prices were rising while loan regulations were in place, and these companies were the ones where loans were still accessible. As a result, most of the properties currently undergoing auctions were requested by loan shark companies. Overall auction requests are also about three times higher than in 2021, and the winning bid rate has fallen to less than half of what it used to be."
Experts attribute the background of this situation to the worsening economy. Kwon Dae-jung, a professor of real estate at Sogang University, forecasted, "We must pay attention to the fact that voluntary auctions, rather than compulsory ones, are increasing. There are many cases where people took out loans using their homes as collateral, but were unable to repay them as interest rates rose. Excessive investment by young people is also one of the causes. Currently, most of the voluntary auction listings are villas. Even if there is no immediate major impact on apartments, the number of listings is gradually increasing, and this phenomenon will inevitably have an effect. The market is unstable due to impeachment [concerns], and loans are difficult to obtain. It appears interest rates will only fall once this situation is resolved."