Core Insights - The real estate market is facing a significant crisis characterized by high vacancy rates, increasing auctioned properties, and a rising number of unfinished buildings, indicating a loss of confidence among buyers and investors [1][9][10] Group 1: Vacancy Rates - The average housing vacancy rate in 28 major cities in China has reached 12%, with first-tier cities at 7%, second-tier cities at 12%, and third-tier cities at 16% [1] - In third-tier cities, approximately 1 in 6 homes is unoccupied, reflecting a severe imbalance in housing demand and supply [1] Group 2: Auctioned Properties - The number of auctioned properties is on the rise, with 370,000 properties auctioned in 2024 and an expected increase to 719,000 in 2025, indicating financial distress among homeowners [4][5] - In Hangzhou, the actual transaction volume of auctioned properties increased by nearly 60% from 2024 to 2025, highlighting a deep adjustment in the housing market [4] Group 3: Unfinished Buildings - The national unfinished building rate is approximately 3.85%, equating to around 200,000 homes, with some cities experiencing rates exceeding 10% [6][8] - Major developers like Evergrande have left over 1.62 million unfinished homes, contributing to the overall crisis in the real estate sector [8] Group 4: Market Dynamics - The real estate market is undergoing a self-correction process, with high vacancy rates, increasing auctioned properties, and unfinished buildings all pointing to a significant confidence crisis [9][13] - The market is expected to see a 10% decline in total sales in 2026, with new construction areas projected to shrink by 15% to 20% [10] Group 5: Government Response - The government has been working to address the issues, with approximately 7.5 million "sold but not delivered" homes completed by the end of 2025 [8] - New regulations for selling existing homes are set to be implemented in 2026, aiming to reduce the risk of unfinished projects [12]