This photo taken on Nov. 26 shows an apartment complex in Banpo-gu, Seoul. (Yonhap)
In a sign the local real estate market is in distress, the number of court seizures of property due to debt delinquency has marked the highest figure since 2013, Supreme Court data showed Monday.
According to the Internet Registry Office of the Supreme Court, there were 129,703 applications for auction of court-seized real estate filed this year through November. This already marks the highest figure since 148,701 in 2013.
The figure for actual auctions of court-seized property marked 105,614 in 2023, a 61 percent increase compared to the previous year.
As defined by Article 79 of the Civil Execution Act, when a property owner is delinquent on a mortgaged property, a district court can seize the property and auction it off, using the proceeds to pay back the debt.
In the past two years, Korea has seen more court-seized property auctions, driven by a sluggish real estate market and rising interest rates. The Bank of Korea had kept its base interest rate under 2 percent from March 2015 to May 2022 but has kept it above 2 percent since July of 2022.
During the Yoon Suk Yeol administration, the base rate peaked at 3.5 percent in January of last year and currently sits at 3 percent.
The number of auctioned properties tends to increase sharply when rates are high. There were 66,248 such auctions in 2021 and 65,586 in 2022, a little over 60 percent of the 2023 figure.
This is closely linked with the recently popular notion of "yeong-ggeul," meaning "leverage even your soul, and invest everything." This is based on the belief that property values will always go up, making it better to buy as soon as possible.
Many who bought real estate with substantial amounts of debt have been unable to make the payments as interest rates rise.
The rapid surge in seized and auctioned properties has mainly affected multi-unit properties such as apartments, commercial buildings and the residential-commercial units locally called officetels.
As of November, a total of 51,853 auction applications involved multi-unit properties, marking a 48 percent increase compared to the same period in 2023. By region, Gyeonggi Province led all regions with 16,094 such auctions, followed by 6,428 in Busan, 5,466 in Seoul and 3,820 in Incheon.
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