The Bitter Stories Behind the Boom of Chinese Foreclosed Houses

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Starting from November 2024, many mainland economic news websites have reported similar content, which is the abnormally hot market for judicial auction houses.

The quantity of judicial auction houses serves as an important economic reference data that directly reflects the economic and market prosperity of society.

In recent years, due to the Chinese Communist Party’s lockdown during the epidemic, which eventually led to the collapse of the economy, the real estate market, which has always been seen as a cash cow by the CCP, has fallen into a slump. Many ordinary Chinese people have had their properties repossessed by banks due to defaulting on mortgage payments, and these properties are auctioned by the court, commonly known as judicial auction houses.

Today, let’s take a look at why the judicial auction house market in China in 2024 has become so hot, and the difficulties this situation has brought to ordinary Chinese people.

There are two sources of judicial auction houses: one is mortgage default, such as buyers encountering unforeseen circumstances like unemployment, pay cuts, illness, and being unable to repay the loan after purchasing a house with a loan; the other is using the property as collateral for financing but being unable to repay the loan. Both situations lead to the property being auctioned off to repay the debts.

Regardless of the situation, it is caused by debts, and the reasons for the debts vary, but the main reason is the poor economic environment.

Since the CCP imposed strict control during the epidemic three years ago, many industries have withered, coupled with the CCP’s crackdown on specific industries and multiple real estate companies going bankrupt, which has led to a rapid decline in the Chinese economy.

In recent years, from the catering and hotel industry to manufacturing, from small and medium-sized enterprises to internet companies, from the education and training industry to finance and securities, from freelancers to public servants within the system, all have faced risks of unemployment, layoffs, and pay cuts. Among these people, many are burdened with the pressure of mortgage payments.

According to Ernst & Young’s “China Listed Banks 2023 Review and Future Outlook” statistics, whether it is large banks, city commercial banks, or rural commercial banks, the default rate for personal housing loans is continuously increasing.

In 2021, the default rate for personal housing loans of listed banks was 0.32%, which increased to 0.49% by 2023, equivalent to one person out of every 200 borrowers being unable to repay the mortgage, resulting in the bank reclaiming the property.

Within just two years, the default rate for personal housing loans has increased by over 50%.

Furthermore, according to data from China’s Enforcement Information Disclosure website, as of early September 2024, the number of persons in China in a state of untrustworthiness was 8.41 million. This data was 5.7 million at the beginning of 2020, representing an increase of nearly 70% over four years. How many of these individuals will face the situation of their homes, which their entire families rely on, being auctioned off?

According to data released by the China Index Research Institute, the number of judicially auctioned properties nationwide surpassed 600,000 in 2022, a 35.7% increase from 2021; by 2023, it increased to nearly 800,000, a 36.7% increase from 2022. In these two years, the annual increase in the number of judicial auction properties has exceeded 35%.

Guoxinda’s national big data on judicial auction houses provides even more staggering figures, with the national number of judicially auctioned properties between January and October 2024 reaching close to 550,000 units, an increase of over 60% from a year ago.

Guoxinda data shows that in the first ten months of 2024, the national number of judicial auction houses reached close to 550,000 units, an increase of over 60% from a year ago.

Looking at the types of properties auctioned judicially, the most significant judicial auction houses from January to October 2024 were residential properties, exceeding 260,000 units.

Compared to the same period in 2023, the national residential judicial auction property listing increased by over 25%.

These 260,000 residential properties may mean that 260,000 families have lost their homes.

According to official figures released by the CCP’s seventh national census in 2020, China has approximately 494 million households. 260,000 households represent one in two thousand, meaning that in October 2024, one in two thousand families lost the houses they scrimped and saved to purchase.

From January to October 2024, close to 150,000 commercial properties were judicially auctioned. Commercial properties include various shops, eateries, hair salons, and offices.

In terms of the auction property transaction rate, from January to October 2024, the residential property transaction rate was 34%, while the commercial property transaction rate was low at 18%, with an average transaction discount rate of around 80%.

From January to October 2024, the national listing volume of commercial properties judicially auctioned increased by over 30% compared to the same period in 2023. Although the transaction volume increased, the average transaction price decreased by 30% year-on-year.

These numbers illustrate the economic situation in China in 2024. Due to the economic downturn, property owners are unable to repay their mortgages, leading to the bank reclaiming the houses. Moreover, even the relatively lower-priced auctioned stores are not easily sold due to the economic slump. Even if sold, the prices are lower by twenty percent compared to the requesting price.

Industrial properties are spaces used for factories, workshops, and artisan workshops.

From January to October 2024, the national number of judicially auctioned industrial properties was close to 3,700 units.

Compared to the same period in 2023, the number of judicially auctioned industrial properties increased by 32%, but the transaction amount decreased by 26%.

These figures demonstrate that due to China’s poor economy, many factories are unable to sustain operations, bosses cannot repay bank loans, and the factories are repossessed by the banks. Alternatively, due to the weak economy, even if auctioned industrial properties are sold, they do not fetch high prices. Data indicates an increase in auctioned industrial properties but a decrease in transaction amounts.

Chongqing is a hot spot for judicially auctioned houses. Whether they are residential, commercial, or industrial properties, Chongqing ranks high in all categories.

In the first ten months of 2024, close to ten thousand residential properties were auctioned in Chongqing, ranking first.

Over 4,500 commercial properties were auctioned, ranking in second place after Chengdu, which was outshadowed by over 1,500 properties. The withdrawal rate exceeds 70%, representing the proportion of properties that were not auctioned.

160 industrial properties were auctioned, also ranking first, with a withdrawal rate exceeding 70%.

Some news related to Chongqing also reflects the local economic situation.

For example, due to the high youth unemployment rate, Chongqing has for the first time exported batches of college graduates to work in the Middle East.

In July 2024, as reported by the Chongqing Daily, over 70 recent graduates from eight universities in Chongqing and Sichuan were introduced by state-owned enterprises in Chongqing to work in Oman, a Middle Eastern country.

In January 2025, the Chongqing Daily reported that at an economic work conference in Rongchang District of Chongqing, the District Party Secretary Gao Hongbo called on officials to “buy new clothes, go to restaurants,” lead consumption, and drive consumption.

Behind every property brought out for judicial auction, whether a residence, store, or factory, there may be a heartbreaking story.

In 2024, with extensive foreign capital withdrawal, businesses closing, and people facing unemployment, layoffs, and pay cuts, the most notable phenomenon was the surge of suicides. The exact number of suicides caused by loss of income, inability to repay mortgages or car loans, or property being auctioned off cannot be accurately counted.

In May 2024, multiple people jumped off a bridge in Taiyuan, leading to the installation of bridge-watching personnel. Netizens noted that many people faced significant life pressures, low incomes, and were burdened with house and car loans.

In July 2024, a 30-year-old high-salary female employee of CITIC Securities committed suicide by jumping off a building due to a salary reduction, carrying a hefty mortgage of millions.

In July 2024, a netizen posted online that their neighbor and spouse were both laid off, and having bought a house to enroll their child in elementary school at the time, they emptied six wallets and borrowed money, paying a down payment of 450,000. The husband left a suicide note for his wife and jumped from the building, saying that the house cannot be sold and the payments are impossible to keep up with.

On the 2024 tragic rankings list, the ninth spot is a combination of unemployment + no savings + house loan + child rearing + debt + debt collection + illness + parent illnesses + property judicial auction. Many people in videos lament being laid off, unable to find work, having no income, unable to repay car and house loans, and even struggling to afford meals. Among them, how many people’s homes were eventually reclaimed by the bank and entered the judicial auction house list?

In addition to judicially auctioned houses, there is a more unfortunate group of victims, which are the owners of “abandoned buildings.”

They purchased houses before the epidemic, during the time of soaring house prices, applied for loans from banks, but due to the developer absconding, these individuals who did not receive their properties still need to repay significant property loans. Once the loans are cut off, they become “debtors” and are listed on the credit blacklist.

The Beijing Youth Daily once reported that a mother-daughter pair from Guangxi bought a commercial apartment in Nanning in 2019 and borrowed 570,000 from a local bank. Unexpectedly, the property developer absconded, and the house was left unfinished.

In 2023, this mother-daughter duo filed a lawsuit to the court, requesting the bank to stop loan repayments because they found that the bank that provided the loan to them had engaged in irregular lending practices. As their mortgage payments were not properly transferred into the designated presale property fund account, but instead funneled into another account belonging to the developer.

However, in court, the bank’s lawyer argued that the bank’s payment of loans into a non-monitored account does not directly correlate to whether the property can be delivered on time. The responsibility for the failure to deliver the property on time does not lie with the bank.

The court did not render a verdict. Therefore, this mother-daughter duo stopped paying their mortgage installment. Three months later, they were listed on the credit blacklist.

This mother-daughter pair is not the only victims. Over 200 homeowners who purchased in the same project faced the same situation. They all submitted the same application to the court, but none of the courts accepted their cases.

After exhausting all efforts, paying a down payment, and monthly installments, they ultimately ended up with no money and no property and became “debtors.” Is there anyone in the world more unfortunate than the Chinese?

Alright, today’s episode ends here. Thank you for watching, and we’ll see you next time.