Houses at auction increase almost 24% and press Chinese market

Segundo data disseminated on Friday by China Index Academy, real estate research institute, 539 thousand properties were placed at auction by court order in 355 Chinese cities between January and July.

The increase in supply dropped by 9%, in homologous terms, the prices reached, at a time when courts and asset managers seek to sell confiscated houses to owners who no longer pay the loans.

According to data published by the Chinese press, only about one third of the buildings put up for auction found buyers, at prices on average around 30% lower than those of comparable properties on the used houses market.

In some smaller cities, a small part of the houses came to be sold with discounts of between 50% and 60%, while many others received no offer.

The discounts are also affecting expectations in the rest of the market by strengthening, among potential buyers, the perception that prices may fall further.

The demand is therefore concentrated in well-located houses, in larger cities, close to schools and with good transport links, while old, peripheral or rural buildings continue to have difficulty finding buyers.

“ Property transactions in judicial auctions increased by 42.7% in homologous terms in the first seven months of 2026, which seems impressive. But this seems to reflect more the use of price cuts by sellers to drain a growing accumulated offer than a sudden recovery of buyers’ confidence in the real estate market,” said columnist specialized in the Jiang Xiaorong sector, in an article published on Baidu Baijiahao platform.

The liquidity crisis is also hitting families who want to switch homes, but cannot sell the current one.

Jiang cited the example of a family that needed three million yuan (about 382 thousand euros) to pay for the entry of a new dwelling, but whose house, initially valued at 2.5 million yuan (318,000 euros), remained three months without buyer, despite two price cuts, to 2.2 million yuan (280 thousand euros).

By April, eight million people were officially registered in China as perpetrators after they stopped paying housing loans, according to another Chinese commentator, who writes under the pseudonym Property Observer.

About 60% were under 35 years of age and approximately 45% of families who stopped paying loans had suffered job losses, especially in sectors such as restoration, real estate and private education.

However, the market has strong regional differences.

Between January and July, 245,000 residential properties were auctioned, of which 89,000 found buyer, equivalent to a sales fee of 36.2%.

In Ningbo, in the east of the country, the proportion reached 80.8%, followed by Shanghai (78.5%), Shenzhen (71.3%), Hangzhou (70.4%) and Canton (55.6%).

In Luoyang, in central China, only 12.87% of the auction houses were sold.

On average, the auctioned properties were sold this year for about 73% of their valuation value. When a house finds no buyer on the first attempt, the initial price of a second round can be reduced by up to 20%.

Pressure extends to the second-hand market. In July prices fell by 3.7% in homologous terms in the four largest cities, according to the Chinese National Statistical Office.

Canton (south) recorded a decline of 4.7%, Beijing of 4.5%, Shenzhen of 3.6% and Shanghai of 2%.

In the cities that make up a second echelon, the fall reached 5.1%, while in the third echelon it reached 5.8%.

Investment in real estate development has now dropped 19.2%, in homologous terms, in the first seven months, to 4.3 billion yuan (about EUR 547 billion), as promoters have reduced new projects to prolong the crisis.