Bidding frenzy for 2.3 billion won homes crashes South Korea auction site

SOUTH Koreans piled into an auction for discounted luxury apartment units on Monday (Jul 29), crashing the government website for several hours, underscoring strong investor appetite for the greater Seoul area’s hot property market.  

More than two million people, which was unprecedented, were waiting to log in at 2.30 pm on Monday to bid for the 114 units at a luxury apartment complex in Banpo and one unit in Dongtan, south of the capital, before the website went down.

The state-run Korea Real Estate Board has extended the bidding deadline to 11 pm for the Banpo apartment and to Tuesday for the Dongtan flat, according to a statement.

The apartment units in Banpo, one of the most affluent areas in Seoul, could cost as much as 2.3 billion won (S$2.2 million) each. Given the market rate in the area, a winner could make a potential profit of two billion won. The unit in Dongtan near a chip complex of Samsung Electronics could generate about one billion won of return.

The surprisingly strong demand for the units is another sign of recovery in Seoul’s top-end property market, which the central bank is closely watching as it considers the timing of an interest rate cut after a hold since early 2023. The Bank of Korea is concerned premature rate-cut signals may risk reigniting the real estate market.

Seoul’s apartment market has been on a tear amid a buying spree in popular areas.

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Prices in the capital climbed 0.3 per cent last week from the previous seven-day period in the biggest rise since September 2018. They also extended gains to 18 consecutive weeks, according to data from the Korea Real Estate Board.

The units are being offered below their market value under a government plan which requires most apartment developers to sell a part of new projects at a discount through a pre-sale programme. During periods of a housing boom, the gap between new home prices and market prices is typically big, attracting speculators in the hope of making a profit.

South Koreans call the apartments “lotto” since the trade has the potential to generate billions of won in profit. The average prize money of the weekly lottery in the nation stood at 2.1 billion won last year.