Chinese state-owned enterprises are stepping up purchases of foreclosed residential projects, signalling tentative progress in efforts to stabilise the country’s prolonged property downturn. The acquisitions, often made at substantial discounts, reflect a policy shift aimed at absorbing excess supply in a sector that has weighed on economic growth since 2021.
A review of auction announcements show state firms winning a portion of foreclosed property tenders over the past year. Where disclosed, transaction prices ranged from 19 to 43 per cent below estimated market values, including projects still under construction. Analysts say the overall scale remains limited but represents the early stages of what could become a sustained intervention to reduce housing inventory estimated at roughly 3,000 square kilometres.
Transactions span multiple regions. In Hainan, a firm administered by an eastern Chinese city purchased 37 apartments for 139.3 million yuan, compared with an estimated value of 248.7 million yuan. A local housing agency in the same province bought six apartments at around 20 per cent below their stated value. In Guangzhou, a city operations company acquired 62 units at roughly two-thirds of prior secondary market prices. Other successful bidders include state-linked entities in Ma’anshan, Dali, Fuzhou and Huangshan.
Analysts suggest such purchases may cushion further price declines and ease pressure on growth by shifting distressed assets onto state balance sheets, where financing costs are lower. Some units are intended for conversion into affordable housing, while involvement from tourism-related firms indicates alternative usage strategies. However, state entities are frequently the sole bidders in these auctions, underscoring weak private demand. Of 719,000 foreclosed properties listed in 2025, only 169,000 were sold, at an average discount of 26 per cent. Observers warn that transferring assets at reduced prices rather than fully writing them down could extend the sector’s adjustment, leaving unresolved questions about how and when China’s housing market will ultimately find a durable floor.
