Recently, domestic banks' direct supply of housing has attracted widespread attention in the market, but BOCIC believes this is essentially a routine operation for banks to concentrate on disposing of non-performing assets at the end of the year, with the aim of recovering funds, and has limited impact on the overall real estate market.
On December 5th, the real estate industry research team of BOCIC pointed out in their report that the direct supply of housing by banks is essentially a routine operation for banks to dispose of non-performing loans, which has been occurring since 2015.
BOCIC believes that the recent increase in attention is mainly due to three factors. First, the market's sensitive sentiment under the continued downturn of the real estate market; second, the objective reality of rising pressure on banks' non-performing assets; and third, the seasonal demand for asset disposal at the end of the year.
The report emphasizes that the impact of bank direct supply housing on the real estate market in core first- and second-tier cities is negligible, but it may create some price pressure in certain areas of third- and fourth-tier cities. The true driving force of market sentiment still comes from the macro economy and the fundamentals of the real estate market, rather than the phenomenon of bank direct supply housing itself.
<h2>Differences Between Bank Direct Supply Housing and Foreclosed Housing</h2>
Bank direct supply housing is obtained by banks through the disposal of non-performing loans. After completing the debt separation and obtaining full ownership, it is sold directly as the landlord, rather than through the traditional judicial auction method.
The sources of bank direct supply housing mainly come from three channels: properties mortgaged by enterprises or individuals that have become the bank's property due to inability to repay loans, personal mortgage defaults that have been legally reclaimed, and unsold properties that banks are forced to take over during corporate bankruptcy or debt restructuring.
According to data from the Alibaba asset platform, among the bank direct supply housing listed from January to October 2025, second-hand houses accounted for 83%, new houses accounted for 17%, and rental-type properties accounted for only 1%. The standard process for banks to obtain these properties is:
<blockquote>
After the debtor defaults, the collateral first undergoes two rounds of judicial auctions. If both fail, the court will rule to transfer it to the bank, forming &#34;debt repayment assets.&#34;
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It is worth noting that the transaction process for bank direct supply housing is more similar to that of second-hand housing, and it is usually possible to view the property on-site. Additionally, the core differences from foreclosed housing are:
<blockquote>
<ul>
<li>Ownership: Bank direct supply housing has clear ownership (already transferred to the bank), while the ownership of foreclosed housing remains under the original owner's name during the auction.</li>
<li>Price: The average transaction price of bank direct supply housing (3754 yuan/sqm) is far lower than that of foreclosed housing (8319 yuan/sqm). This is because direct supply housing is often located in lower-tier cities and consists of assets that have failed to sell at auction, resulting in relatively lower quality.</li>
<li>Risk: The counterparty in bank direct supply housing transactions is the bank, which basically avoids common disputes in foreclosed housing such as eviction, leasing, and unpaid fees, resulting in lower risk. However, caution is needed regarding properties sold by some platforms in the form of &#34;debt transfer,&#34; rather than true ownership.</li>
</ul>
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</blockquote>
<h2>Four Major Market Characteristics of Bank-Direct Supply Housing</h2>
The research report points out that the supply of bank-direct supply housing is limited, with a highly concentrated regional distribution in third and fourth-tier cities. Additionally, the proportion of finely decorated housing is extremely low, and the overall transaction situation is also very sluggish.
In terms of the supply volume of bank-direct supply housing. Data shows that although the listing scale of bank-direct supply housing has significantly increased since 2024, the absolute volume is limited, and the overall scale is far below that of auctioned properties.
From 2019 to October 2025, a total of 52,000 bank-direct supply residential units were listed, while the cumulative supply of auctioned properties during the same period reached 980,000 units, meaning the number of bank-direct supply housing is less than one-eighteenth of that of auctioned properties.
Regional distribution is highly concentrated in lower-tier cities. In the listings from January to October 2025, first-tier cities accounted for only 0.6%, second-tier and provincial capital cities accounted for 11.7%, while third and fourth-tier cities accounted for as much as 87.7%.
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By region, the three northeastern provinces accounted for the highest proportion at 42.4%, with Liaoning at 22.5% and Heilongjiang at 16.5%. The northwest region accounted for 19.2%, with Inner Mongolia and Gansu each accounting for 13.0%.
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Housing characteristics highlight vacancy and demand for first-time buyers. Among the listed properties, the proportion of unfinished units is 59%, indicating that most are vacant homes.
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In terms of layout structure, units under 90 square meters for first-time buyers account for 30%, while improved products of 120-200 square meters also account for 30%. Properties priced below 1 million account for as much as 86%, which is related to the fact that many properties are located in lower-tier cities and also reflects the impact of declining housing prices in the past two years.
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Transaction rates are sluggish, with most transactions occurring at the base price.
The report emphasizes that among the 14,000 listed properties this year, only 920 were sold, resulting in a transaction rate of only 7%, far below the 20% of auctioned properties during the same period. Among the sold properties, 66% were transacted at the base price, with an average premium rate of only 7%. Gansu, Heilongjiang, Liaoning, and Inner Mongolia accounted for 55% of the transactions, which basically aligns with the supply pattern.
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<h2>Which Banks Are Selling?</h2>
The report statistics as of November 12, 2025, on the types of major banks in listed housing sources:
<blockquote>
<ul>
<li>City commercial banks account for the highest proportion, 40%.</li>
<li>State-owned large banks account for 28%.</li>
<li>National joint-stock banks account for 18%.</li>
<li>Rural commercial banks account for 14%.</li>
</ul>
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From the perspective of the balance of debt assets, the 27 sample banks totaled 52.8 billion yuan at the end of June 2025, an increase of 6.0% compared to the end of 2024.
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It is worth noting that in the past two years, there has been a significant increase in direct supply housing from small and medium-sized banks (state-owned banks and joint-stock banks mostly appeared between 2015-2017). This may reflect that some aggressively operating small and medium-sized banks had weak risk control during the real estate market upturn, leading to a significant increase in defaults after the market downturn.
<h2>Overall market impact is limited, with local pressure</h2>
BOCIC emphasizes that the cumulative transaction volume of direct supply housing by banks this year is less than 1,000 units, accounting for a negligible proportion of the national market, making it difficult to shake the overall volume and price trend.
For first- and second-tier cities, where the housing supply accounts for only 12%, a small number of low-priced housing sources are even less likely to have a substantial impact.
However, caution is needed regarding local shocks in third- and fourth-tier cities. In these cities, the proportion of direct supply housing from banks reaches 88%, and buyers are more price-sensitive.
When a large number of direct supply houses priced 5%-25% below market price enter the market, they may become new price anchors for the region or community, driving down the prices of surrounding second-hand houses.
On the market sentiment level, the bulk sale of properties by banks may be misinterpreted as a bearish signal, temporarily affecting market psychology. However, the main bearish sentiment still stems from the macroeconomic and real estate fundamentals, with low correlation to the heat of bank direct supply housing.
The report points out that in the context of a continuously rising auction market failure rate, which reached 81.3% in the third quarter of 2025, banks choosing to sell directly to improve disposal efficiency is a normal measure to cope with the real estate downturn cycle.
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BOCIC believes that the bank's direct supply of housing is a routine operation for banks to dispose of non-performing loans, not a new phenomenon. From 2019 to October 2025, a total of 52,000 units have been listed, far below the scale of auctioned properties. This year, the transaction rate is only 7%, which has limited impact on the national real estate market, but may create price pressure in certain areas of third and fourth-tier cities

The Truth Behind the Popularity of Direct Supply Housing by Banks