Chinese rural banks are struggling to offload hundreds of foreclosed properties despite significant price reductions, highlighting a deepening real estate crisis. These banks are primarily located in less-developed regions that have experienced substantial declines in home prices. According to a Reuters review of listings on JD.com Asset Trading Platform, properties are being offered at discounts ranging from 20% to 30% below market value.
The rush to sell foreclosed properties at cut-rate prices reflects the increasing pressure on smaller rural banks grappling with rising bad loans and limited capital. Properties, which are traditionally considered high-quality collateral for bank loans, have been sharply devalued due to widespread price drops across China’s housing market. As the crisis has rippled across the economy, the number of properties seized by rural banks and put up for auction has grown dramatically. For instance, banks in Gansu province offered 4,292 properties last year, a steep increase from 478 in 2023.
The property market downturn, which began in 2021, represents the most prolonged and severe crisis in China’s history. It has significantly weighed on the nation’s $19 trillion economy, with little sign of a near-term turnaround. UBS estimates that the volume of foreclosed properties will surge to 2.43 million units in 2027, up from 640,000 units in 2025. Bank of Jilin, mentioned in the article, is a city commercial bank that provides various financial services including deposits, loans, and payment settlements. JD.com is a major e-commerce platform in China, also providing auction services for assets.
According to Gavekal Dragonomics analyst Xiaoxi Zhang, the lack of substantial support policies for the real estate sector suggests a regulatory approach that favours support without stimulus. She said, “Banks holding onto foreclosed properties are unlikely to see prices recover, so it’s better to sell earlier and cut losses.” S&P Global Ratings director Tan Ming cautioned that widespread discounts would be unsustainable, potentially destabilising the real estate market and prompting government intervention.
