The number of foreclosed properties in China reached a record high in 2023, as the debt-laden real estate sector continues to hamper China's economic recovery, according to Reuters.
The total number of real estate foreclosures, including commercial, residential and industrial properties, land, garages and parking spaces, reached 796,000, an increase of 36.7% year-on-year. according to to Reuters. China's economic growth rate will be 5.2% in 2023, above the 6% that was common before the COVID-19 pandemic, as indicators such as consumer confidence and disposable income were weak and the real estate sector received a tailwind. was below the trend. It has been suffering from negative economic effects for many years, suffering from debt and the threat of default. (Related article: Home sales in 2023 are the lowest in 28 years due to the affordability crisis plaguing Americans)
A total of 389,000 homes were foreclosed in China in 2023, an increase of 43% from the previous year, and about 99,000 of them were auctioned, worth a total of $20.84 billion, according to Reuters. . The combination of a high number of foreclosures and a decline in home prices led to the worst decline in about nine years.
FMS investors said U.S. shadow banking was the most likely source of credit events in January, followed closely by Chinese real estate and U.S. CRE.
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The total number of foreclosures in China has increased since 2020, when recent economic troubles first began following strict lockdown measures during the COVID-19 pandemic, according to Reuters. It has continued to increase ever since. Chongqing and Chengdu in China had the highest number of home foreclosures in 2023.
Companies responsible for about 40% of China's housing stock are expected to default on their debts starting in 2021, and major Chinese developers Evergrande and Country Garden also have huge debts and are at risk of defaulting. Zhongzhi Enterprise Group, one of China's leading asset management companies, declared bankruptcy in January, citing losses from its involvement in the real estate market.
Foreign investors will increasingly withdraw capital from China in 2023, with a $3.8 billion outflow in December, the third worst outflow in the country's history. The Institute of International Finance estimates that about $65 billion will be withdrawn from the country's economy in 2024.
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