The effect of choense deposit defaults on the number of foreclosure auctions: Focusing on the Seoul metropolitan area

The purpose of this study is to empirically identify the impact of jeonse deposit defaults on the number of housing auctions in the Seoul Metropolitan Area (Seoul, Gyeonggi, and Incheon) and to analyze the structure and regional heterogeneity of the transmission of default indicators to the auction market. To this end, we constructed a monthly panel dataset from August 2022 to April 2025 and adopted a fixed-effects model as the baseline specification based on the Hausman test. The results show that the apartment sales price index and apartment sales transaction volume significantly reduce the number of auctions, whereas the apartment jeonse ratio, number of unsold apartments, number of guarantee accidents, and number of tenants’ rights registration orders increase the number of auctions. Among the macroeconomic variables, the corporate bond yield has a positive effect only in Seoul, whereas money supply (M2) has a positive effect throughout the metropolitan area. These findings indicate that there is a structure in which the number of auctions increases as indicators of jeonse deposit default risk-namely, the number of guarantee and the number of tenants’ rights registration orders-and jeonse deposit defaults constitute a key channel through which distress is transmitted to the auction market. The analysis also reveals substantial regional heterogeneity within the metropolitan area, with Incheon exhibiting a relatively high average number of auctions, and Seoul showing greater sensitivity to interest rate changes. Therefore, policy responses to the increase in auctions triggered by jeonse deposit defaults should move beyond uniform measures and instead provide region-specific support and management that considers both local characteristics and default risk indicators, such as the apartment jeonse ratio, number of guarantee accidents, and number of tenants’ right registration orders.