Research On The Price Discount Of Housing In Online Judicial Auctions And Its Influencing Factors

Judicial auction refers to the way in which the judiciary exercises the right of enforcement to dispose of properties in the form of an auction.According to the regulation of the Supreme People’s Court,from 2017 onwards,judicial auctions should be held online.With the increasing transparency of the disposal mechanism,judicial auctions have gained more and more attention and participation.As one of the most important physical assets of residents,houses are commonly involved in judicial auctions due to mortgage defaults,private lending disputes,etc.This study takes the residential properties sold in judicial auctions as the principal research object and mainly focuses on their price behavior.To start with,the core variable of this research,price discount,is defined to describe the relative deviation of the final transaction price of a property from its open market value.Based on the transaction data of houses sold in judicial auctions on Taobao website covering 86 major cities in China from 2015 to 2018,descriptions are firstly given on the average level and dynamic patterns of the price discount.Overall,in the sample,the average magnitude of the discount is around 4%,which signifies the transaction price is about 4 percent lower than the market price on average.With the first half year of 2017 as a turning point,the discount shows a first-fall-then-rise trend.Besides,in relatively more developed regions,the average discounts tend to be smaller.This study further analyzes the main factors affecting the price discount from the macro level and proposes hypotheses from three aspects: macroeconomic environment,housing market and policy restrictions.Results of panel-data regression models show that housing market conditions compose an important factor behind variations of the discount and the impact is mainly reflected in two dimensions,price and liquidity.In general,the faster the housing price increases,the greater the liquidity of the housing stock,the smaller the price discount will become.This study then turns its perspective to the micro level and approaches the discount with its special trading mechanism,judicial auction.By comprehensively analyzing from three aspects: the subject of the auction,the procedure of the auction and the object of the auction,some potential influencing factors are put forth.Empirical results highlight the significant impact of rapid liquidation on the discount,as well as verify other key factors such as the level of the court(subject-related factor),the existence of priority bidder(procedure-related factor),the status of mortgage(object-related factor),etc.Based on previous findings and conclusions,finally,some practical suggestions are provided for the judicial organs,financial institutions,asset appraisers and other parties engaged in the entire process of judicial auction.Specifically,the accuracy of the asset valuation result,the standard of the judicial auction procedure and the transparency of the policy system should be improved so as to reduce the loss of property value and enhance the efficiency of asset disposal process.