The Relationship between the Sales and the Auction Markets of Apartment

This study analyzes the relationship between the apartment auction market and the sales market in South Korea. To address the limitations of previous studies, which were limited to specific regions and failed to fully consider the unique characteristics of the Korean auction system, this research utilizes nationwide microdata from January 2005 to December 2024. This study focuses on the winning bid ratio of the first and second auction rounds in conducting the empirical analysis. The key findings are as follows. First, the auction market leads the sales market by approximately eight months in Seoul and nine months nationwide. Second, a nonlinear relationship exists between the winning bid ratio and the actual transaction price index, forming a “decline-rise-decline” pattern. Third, the winning bid ratio maintains a positive relationship with the transaction price index within a specific range (78.7-171.3% for the first and second rounds), but outside this range, the relationship turns negative. Fourth, the winning bid ratio of the first and second auction rounds serves as a more accurate indicator of market conditions than the total winning bid ratio.