(Yicai) Jan. 23 -- Chinese courts ordered a record number of foreclosed properties to be auctioned off last year due to mismanagement at real estate developers, the inability of home owners to repay loans, or debt disputes.

The number of foreclosed properties listed for judicial auction jumped 37 percent to a 796,000 units in 2023, according to data from the China Index Academy, which monitors the auctions in 355 cities. Of them, some 149,000 were sold, up 20,200 from the previous year, fetching a total of CNY300.4 billion (USD42 billion), almost the same as in 2022.

Foreclosed properties listed for judicial auction refers to those subject to mandatory sale at auction. The number of residential foreclosed properties reached 389,000 last year, a 70 percent increase to account for 48.9 percent of the total, while foreclosed commercial properties jumped 23 percent to 224,000.

The increases were related to a surge in property-related non-performing loans at banks. Eighteen major listed lenders had bad real estate loans of CNY297 billion (USD41.5 billion) as of June 30, up CNY20.9 billion (USD2.9 billion) from the end of 2022. 

Banks used to regard personal mortgages as the safest type of lending, but property-related dud loans have risen over recent years. 

Eight lenders, including China Construction Bank, Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China, issued 22 non-performing asset-backed securities for personal mortgages worth CNY22.5 billion to 107,300 borrowers last year, according to ChinaBond, the bond information website run by China Central Depository & Clearing.

In 2022, ICBC, Construction Bank, Postal Savings Bank of China, Industrial Bank, and Shanghai Pudong Development Bank only issued eight mortgage-related non-performing ABSs worth around CNY8.5 billion. 

Editor: Martin Kadiev