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Many local governments across China have started auctioning off properties they own through asset management platforms or state-owned enterprises to generate revenue and ease financial burdens.
Recently, in Xichang, Sichuan Province, state-owned companies divided their inventory of 144 housing units into three separate lots, listing them for auction at starting prices slightly below the local market rate. Interested bidders can pay a deposit and participate in online bidding, according to an auction official.
These properties primarily consist of affordable housing units, especially those designated as economically affordable housing, which are held by state-owned companies on behalf of local authorities.
Affordable housing typically refers to properties included in local government policies aimed at addressing the housing needs of low- and middle-income populations, families facing housing difficulties, migrant workers, and residents affected by demolition or relocation programs.
Economically affordable homes are the most common type of affordable housing, allowing qualified buyers to purchase units at below-market prices and obtain partial or full ownership rights. Other forms include public rental housing and shared ownership schemes.
In Fuzhou, Fujian Province, the public resource trading platform recently announced the auction of 302 residential units owned by city-based state-owned enterprises.
Similar actions have been observed in other cities such as Beijing, Guangzhou, Yantai, and Zibo, where local SOEs have listed properties for sale.
One reason for these sales may be that some properties remain unsold after completion, causing capital to be tied up for extended periods. An expert from the Guangdong Housing Policy Research Center explained that selling these assets could help ease financial stress. Additionally, in a declining property market, quick sales can prevent further depreciation of property values.
The difficulty in selling some of these properties could be attributed to their location and construction quality, which might not match those of commercial developments. As residents increasingly prioritize quality living environments, some potential buyers might overlook these units.
The growing trend of auctioning off such properties is also linked to local governments’ efforts to turn state-owned assets into tradable resources, according to a real estate consulting expert. Selling these properties can strengthen the financial position of local authorities.
Releasing oversupply and long-idle affordable homes into the market can also improve asset efficiency, aligning with the principle of maximizing resource utilization, the expert added.
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