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The year 2023 has seen a significant upsurge in property foreclosures in China, with numbers soaring by 32.3% in the first nine months. This worrisome trend can be attributed to the challenges faced by homeowners dealing with mounting debt amidst a struggling property market and an uncertain economic recovery.
A recent survey conducted by China Index Academy, one of the country’s leading independent real estate research firms, revealed that property foreclosures from January to September surged to 584,000 units, compared to 441,000 during the same period the previous year. The distressing rise in residential foreclosures was particularly evident, increasing from 206,000 in the first three quarters of 2022 to 284,000 in 2023. Alarming statistics also show a 4.8% drop in the transaction ratio of these properties being acquired through auctions, which now stands at 25.7%.
The escalating number of foreclosures is concentrated in specific regions, particularly in the southwestern province of Sichuan. This area witnessed a considerable surge, with 27,585 additional foreclosures compared to the previous year, bringing the total to over 70,000.
While China’s economy displayed a stronger-than-expected performance in the third quarter of 2023, raising hopes of the government achieving its 2023 growth target of around 5%, the beleaguered property sector continues to pose significant challenges. This sector is grappling with a liquidity crisis that has raised concerns of a potential ripple effect across the financial sector, both domestically and internationally.
Economists emphasize that despite the positive growth figures, the troubled property sector remains a substantial drag on the overall economic outlook. The lingering uncertainties surrounding property markets continue to cast a shadow on the broader economic recovery.
