China’s rural lenders are confronting acute challenges in offloading foreclosed real estate assets, with steep price cuts failing to attract buyers and highlighting deep strains in the country’s broader property market. Despite offering discounts of roughly 20 – 30 per cent on hundreds of seized homes and commercial units across less affluent provinces, auctions and listings are drawing scant demand, underscoring persistent weakness in housing demand and collateral values.
Rural banks in regions such as Gansu, Sichuan, Jilin and Shanxi markedly increased their listings of foreclosed properties in 2025 compared with the previous year. For example, in Gansu the number of bank-initiated property sales surged from under 2,400 in 2024 to more than 4,000 in 2025. Similarly, Sichuan’s listings climbed from about 370 to nearly 1,900 over the same period. These sales are primarily conducted through online platforms widely used for distressed asset auctions.
The underlying difficulty in disposing of these assets stems from protracted declines in property prices that have eroded what were once solid loan collaterals into liabilities for lenders. In some cases, apartments discounted by almost a third of their market value have failed to secure bidders during multiple auction rounds, indicating that even significant markdowns are insufficient to stimulate buyer interest. As rural banks contend with rising volumes of non-performing loans and constrained capital buffers, the accumulation of unsold foreclosures exacerbates their vulnerabilities.
