BEIJING:

Alarm bells are ringing as newly released data reveals a shocking surge in residential foreclosures across China in 2024. A private-sector survey unveiled on January 7 highlights a worrying trend amidst a struggling property market and inconsistent economic growth.

The report from the China Index Academy—a respected independent real estate research firm—indicates that a staggering 370,000 homes were repossessed this year, marking an increase from 364,000 in 2023. Among these foreclosed properties, only 117,000 found buyers, resulting in a total sales volume of 163.6 billion yuan (approximately US$22.33 billion), reflecting a notable decline of 1.9% compared to the previous year.

Interestingly, the trend isn't limited to residential properties alone. The total number of foreclosures, encompassing commercial, residential, and industrial properties along with land and parking spaces, reached 768,000 units—a slight 0.9% decrease from 2023. However, the ongoing decline in sales could foreshadow deeper financial troubles for many homeowners.

Geographically, the greatest concentration of these foreclosures is found in tier-three and tier-four cities, where 63,871 homes were repossessed. Tier-two cities accounted for 45,997 foreclosures, while tier-one cities reported only 6,994. This urban disparity raises significant concerns about housing stability in less economically vibrant areas.

The uptick in foreclosures has been a gradual, alarming trend since 2020, worsened by the property crisis that began in 2021, stemming from government initiatives aimed at curbing the excessive debt of developers. This crisis has significantly impacted consumer wealth and household spending, causing a ripple effect throughout the economy.

Despite the gloomy situation, policymakers are drawing optimism from recent fiscal and monetary policy relaxations, hoping it could herald a turnaround for the beleaguered property market. However, many economists remain cautious, pointing out that trust among homebuyers continues to erode, and it could be a bumpy road to recovery.

As 2024 unfolds, experts warn that unless robust measures are taken to stabilize the market and foster consumer confidence, the shadow of foreclosures may continue to loom over China’s economy, leading to far-reaching implications for financial stability and growth. What does this mean for potential homebuyers and investors? Stay tuned for the unfolding story!