Now at a 100% premium rate! From “cutting prices to the bone” to “quick hands,” the trend in court-auctioned homes is shifting

(Source: Shanghai Observer News)

As the adjustment of the real estate market gradually deepens, auctioned foreclosure houses—often seen as a “price-sensitive segment”—are becoming an important window for observing the ups and downs of the housing market.

In the past few years, against the backdrop of an overall market downturn, the foreclosure auction market once went through a period of “falling both in volume and price.” A large number of listings were sold at prices below market value, or even at “up to half off.” In general, they also needed to go through the first auction, the second auction, and even a third auction—only after successive price reductions could the properties be cleared.

But entering 2026, this trend is quietly beginning to change. In multiple regions, foreclosure auction houses have been sold with high premiums. Some quality assets were even auctioned at prices higher than the market value, and market sentiment has started to warm.

From “discount blowouts” to “premium bidding”

In late March, the auction result of a foreclosure house in Wujin District, Changzhou, drew attention from the market.

According to information from the Alibaba Asset Trading Platform, this property has a building area of 198 square meters and is located in the Lujin·Boyue (Boxiu Yayuán) community in Hutang Town, Wujin District. Because the original owner became a person subject to enforcement, the property was legally auctioned by the Nantong City Tongzhou District People’s Court. The starting bid was 1.98 million yuan, and the market assessed value was 2.83 million yuan.

The starting bid was about 70% of the assessed value. This discount level is considered standard in the foreclosure auction market and is not an obviously low price.

However, the auction result far exceeded market expectations.

The property attracted 19 registered bidders and more than 17,000 viewings. After 80 rounds of bidding, it was ultimately sold for nearly 4.4 million yuan—an 122% premium over the starting bid, 55% higher than the assessed value, and a transaction price of 22,200 yuan per square meter.

For comparison, according to data from the Beike Zhaofang platform, as of February this year, the community’s average listed price was 26,700 yuan per square meter, and the actual average transaction price was about 18,900 yuan per square meter. This means that the final transaction price of this foreclosure house was not only not discounted—it was significantly higher than the actual market transaction level.

Similar situations have not been uncommon recently.

On March 18, a 138-square-meter foreclosure house in Changzhou Longfor Chunjiang Tianxi (Jiayu Yaju) had a starting bid of 1.2 million yuan and was ultimately sold for 1.95 million yuan, with a premium rate of 62%. On March 10, in Changzhou’s Tianning District, a 88-square-meter property in China Resources International Garden had a starting bid of 620,000 yuan and was sold for 965,000 yuan, with a premium rate exceeding 55%.

Similar phenomena have also appeared in first-tier cities.

On March 16, a foreclosure house in Phase II of Shanghaixuhui Binjiang—Shanghaibay Hao Ting—was sold for 50.71 million yuan. The property’s assessed value was 44.37 million yuan, and the starting bid was 31.06 million yuan (about 70%). The final transaction price was 63% higher than the starting bid and 14% above the assessed value.

The property attracted 23 bidders, and only after 92 rounds of bidding did the gavel finally fall. The transaction price reached 168,700 yuan per square meter, which was slightly higher than the community’s current average listed price (as of February, the Beike platform’s average listed price was about 165,100 yuan per square meter).

It is worth noting that this property was in a rough-finished (unfinished) state and involved enforcement by a court located outside the region. Yet it still drew fierce competition, showing the market’s high recognition of core assets.

From these cases, it can be seen that the logic of “snagging bargains at low prices” for foreclosure houses is being rewritten.

The rebound of second-hand housing drives a rebound in the foreclosure auction market

From the cases above, it is clear that since March, both participation enthusiasm and attention toward foreclosure house auctions have risen in parallel. Cases of high-premium transactions have increased noticeably.

Multiple industry insiders said that this change is closely related to the phased recovery of the second-hand housing market. “At present, the prices of some core cities have entered a phase of a floor. Market expectations are becoming more stable, and buyers’ willingness to enter the market has increased—thereby boosting the activity level of the foreclosure auction market,” said a person who has long tracked the foreclosure auction market.

Judging from performance in key cities, both transaction efficiency and the level of premium have shown clear improvements.

According to data from the Alibaba Asset Trading Platform, in Beijing, the transaction rate of foreclosure houses in the fourth week of March rose to 71%, with an average premium rate of 16.18%. In Shanghai, the transaction rate also reached 71%, and the average premium rate was 17.28%. In Shenzhen, the transaction rate was 62%, and the average premium rate exceeded 20%.

“Transaction rates and premium rates are rising at the same time, which indicates that the market is no longer relying only on price advantages to make deals happen, but there is genuine competition,” the insider said. This usually means that market liquidity is recovering.

Looking back at the earlier market trend, the foreclosure auction market has been going through adjustment cycles for years, especially in 2025, when performance was even more sluggish.

According to data released by the China Index Research Institute, in 2025 the overall foreclosure auction market showed a “simultaneous decline in both volume and price.” The number of units put up for auction was 719,000 for the year, down 6.6% year on year; the transaction volume was 169,000 units, down 4.4% year on year; the transaction amount was 253.62 billion yuan, down 23.6% year on year; the average discount rate was 74.1%, and the clearance rate was only 23.5%.

“Previously, many properties needed multiple rounds of price cuts before they could be sold, and some even went through failed auctions repeatedly,” recalled a real estate asset management professional.

However, signals of a market bottom have begun to appear on the supply side.

The China Index Research Institute said that by the end of 2025, the number of foreclosure auctions for residential properties had dropped significantly. Throughout the year, there were 322,000 residential foreclosure listings, down 10.7% year on year. The institution believes that a contraction in listings usually indicates a reduction in potential supply, which is an important precursor to the market gradually warming up.

Entering 2026, this trend has started to be validated in some cities.

Taking Chongqing as an example, from January to February 2026, 1,146 residential foreclosure auction units were transacted, an increase of 10% year on year; the clearance rate for auction items rose to 39.6%.

The Shenzhen market performed even more prominently. In the same period, 491 residential foreclosure listings were put up for auction, 326 were sold, and the clearance rate reached 66.4%. The transaction discount rate rose to 90.4%, and the average transaction price was about 40,611 yuan per square meter.

Although there are signs that the market overall is warming up, structural differentiation in the foreclosure auction market is also intensifying.

Several interviewed industry insiders said that the current market recovery is mainly concentrated in first- and second-tier core cities and high-quality segments, while third- and fourth-tier cities are still in the adjustment phase overall.

“From the perspective of transaction structure, the properties sold with premiums are mostly concentrated in assets with superior locations, mature supporting facilities, and stronger liquidity,” said the above-mentioned foreclosure auction market research professional. “In terms of transaction conditions, improved residential properties, quality school-district housing, and scarce landscape-view properties are more likely to win favor from bidders in the current stage.”

By contrast, the foreclosure auction market in non-core cities still faces absorption pressure. Data from the China Index Research Institute shows that as of the first two months of this year, in some third- and fourth-tier cities, the number of foreclosure auction listings continued to rise, but the conversion rate from listings to transactions remained low. This divergence trend is also continuing to widen the price gap in the foreclosure auction market.

“Overall, the foreclosure auction market is expected to shift from ‘widespread discounts’ to ‘structural premiums,’ reflecting the broader recovery of expectations in the real estate market and the re-pricing of asset values,” the aforementioned real estate asset management practitioner told reporters.

Original headline: “100% Premium Rate Now! From ‘Half Off’ to ‘Speed Bidding,’ Foreclosure Market Sentiment Has Changed”

Column Editor: Jiang Zhuyun Copy Editor: Dong Siyun Cover Image Source: Shanghai Observer Cover Image

Source: Author: Caixin

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