Few outside China might know that e-commerce giants Alibaba and JD.com host the country’s largest online platforms for distressed property sales. On any given day, their auction websites offer a front-row view of China’s housing downturn where properties are foreclosed and liquidated under court orders, often at market-shaking discounts.

Such scenes have become increasingly common. An industry report shows that in the first half of 2024, the average selling price for properties in judicial auctions was just 77 per cent of appraised value, the lowest in years. In a recent interview, former businessman Meng Xiaosu described these fire sales as “price assassins”, noting they are suppressing home prices and buyer sentiment and undermining Beijing’s efforts to stabilise the property market.

More worrying is the growing number of foreclosures. According to China Index Academy, some 768,000 properties were added to the judicial auction list in 2024. Economists estimate that number could exceed 1 million this year.

While no official figures exist on the stock of foreclosed units now flooding the market, outspoken former Chongqing mayor Huang Qifan suggested that the number has already surpassed 4 million units, more than double the level in 2020. For context, that number equals around 30 per cent of housing transactions in 2024, according to my estimates.

Observers cannot help but draw comparisons with the US subprime mortgage crisis in the 2000s, when the bursting of the housing bubble sent mortgage defaults and foreclosures spiking, burdened financial institutions with mountains of bad debt and triggered a global financial crisis. Some wonder if China is on the verge of its own 2008 moment.