Middle Finger Research Institute: By 2025, the volume and prices of distressed property auctions will drop, with high-priced auction houses flocking to Beijing and Shenzhen.

On January 12th, the China Real Estate Information Corporation (CREIS) released the year-end summary of the foreclosure market. In 2025, the foreclosure market showed a downward trend in the number of properties listed for auction, number of properties sold, total transaction amount, and average price compared to the previous year. Throughout the year, there were 719,000 properties listed for auction (a decrease of 6.6%), 169,000 properties sold (a decrease of 4.4%), a total transaction amount of 2.5362 trillion yuan (a decrease of 23.6%), with an average discount rate of 74.1%. Residential properties were the dominant property type, accounting for 51.9% of the total transaction amount, with the majority of properties being sold in the second auction phase (46.9%). In terms of regional distribution, high-priced properties were concentrated in first-tier and core second-tier cities, with Shenzhen, Shanghai, and Beijing forming the top tier. Within the residential segment, there were 327,000 properties listed for auction throughout the year (a decrease of 10.7%), with 113,000 properties sold at an average price of 8082 yuan per square meter. There was a significant differentiation in transaction prices among cities, with first-tier cities achieving an average transaction price of 36,196 yuan per square meter, while third and fourth-tier cities achieved an average transaction price of 4750 yuan per square meter. According to the CREIS foreclosure data monitoring, in 2025, the top 500 properties by total transaction value were concentrated in 57 cities nationwide, with the top 5 cities (Shenzhen, Shanghai, Beijing, Guangzhou, and Hangzhou) accounting for approximately 80% of the total transactions. The top tier cities of Shenzhen, Shanghai, and Beijing accounted for 351 transactions out of the total 500 transactions, with a significant gap compared to the second tier cities such as Guangzhou and Hangzhou. The third tier cities such as Xiamen, Chengdu, Nanjing, and Suzhou accounted for a total of 67 transactions, while the fourth tier cities had a long tail data distribution, accounting for 57.9% of the total number of cities but only achieving 6.6% of the total transactions. The high-priced foreclosure properties were mainly located in the core areas of first-tier cities, such as Shanghai's Pudong New Area, Beijing's Haidian District, and Shenzhen's Nanshan District. These areas are known for their convenient transportation, rich commercial, educational, and medical resources, and high scarcity of land, leading to higher property values. Despite the high transaction prices, there were significant discounts compared to the assessed value, attracting bidders to participate in auctions and driving up the final transaction prices. Overall, the foreclosure market in 2025 showed a decrease in the number and transaction value of properties listed for auction compared to the previous year. The residential foreclosure market showed signs of cooling down, with a decrease in the number of properties listed for auction and sold, and a decrease in average transaction prices. The market trend indicated a shift towards optimization of transaction structures, with the second auction phase becoming a core channel for transactions. The foreclosure market showed independent cyclical trends, with monthly transaction volumes and amounts significantly influenced by the pace of judicial enforcement. In recent years, the foreclosure market has gained more attention from the market, with increasing participation from institutions, banks, and homebuyers in foreclosure auctions.