The Purchase Restriction Policy And The Discount Rate Of The Judicial Auction Of Housing

Judicial auction refers to a compulsory measure in which the people’s court in China exercises its power in accordance with the law in handling civil litigation to realize the property at the disposal of the executee by way of auction.In 2012,online judicial auction was introduced as the latest form of Chinese judicial auction in civil execution.The emergence of online judicial auctions has effectively increased people’s attention to foreclosed properties,improved the transaction rate and enhanced the efficiency of judicial enforcement.As one of the most important assets of the people,foreclosed properties account for the highest percentage of assets in judicial auctions,and the volume of foreclosed properties has been rising year after year,attracting more and more home buyers.In recent years,the rapid development of urbanization,Chinese housing prices continue to rise,prices remain high,which in turn has led to an intensification of the contradiction between supply and demand,speculative purchase and profit from the investors are not a few.Foreclosed homes are generally the subject of judicial auctions due to mortgage defaults,civil disputes,etc.The pricing is relatively lenient compared to ordinary properties,so many speculators take the opportunity to profit.In order to curb the rapid rise in housing prices and combat speculation,the state has introduced a large number of housing purchase restriction policies,and has formulated relevant purchase restriction policies specifically for judicial auction properties.in December 2021,the Supreme People’s Court announced the relevant regulations,which will come into effect on January 1,2022,stipulating that bidders affected by local purchase restriction policies are not allowed to purchase foreclosed properties,and the purchase restriction policies began to unify applied to the national foreclosure market and the online judicial auction market.Based on foreclosure transaction data from more than 50 cities in China from 2018 to2022,this study describes the trend of monthly average discount rate changes of foreclosed homes in both spatial and temporal dimensions,and conducts a spatio-temporal crosstabulation analysis.Overall,the national average discount rate of foreclosed properties in the sample range is 11%,i.e.,the foreclosure transaction price is about 11 percentage points lower than the appraised price.The discount rate as a whole showed a trend of increasing,then decreasing and then increasing,with the discount rate of foreclosed houses in first-tier cities being lower than those in the other two classes of cities for almost the entire study period,and for one-third of the time the discount rate was less than 0,i.e.,trading at a premium,and fluctuating widely,with significantly more active trading compared to other classes of cities.After the descriptive statistical analysis,this study empirically analyzes the degree of influence of the purchase restriction policy on the discount rate of foreclosed properties in China by establishing a double difference model,and then conducts heterogeneity analysis from three perspectives: cities of different classes,cities in the south and north,and cities in the three economic zones of the east and west,respectively,to study the degree of influence of the purchase restriction policy on the discount rate of their foreclosed properties.The final results show that the purchase restriction policy can significantly increase the discount rate of foreclosed houses,i.e.,it reduces the transaction price of foreclosed houses and suppresses the speculative trend of excessive foreclosure price increase.The effect of the purchase restriction policy is higher in new first-tier and secondtier cities than in first-tier cities;the discount rate in southern cities is higher than in northern cities by the policy,and the effect of the policy implementation is more obvious;the eastern and western economic zones are more affected by the purchase restriction policy than the central economic zone.Based on the above main findings and research conclusions,this paper finally summarizes the full text,and provides relevant suggestions for the judicial organs involved in judicial auctions and the government entities that have introduced purchase restriction policies.Specifically,the formulation of the purchase restriction policy needs to be based on the city,and the personalized policy should be formulated according to the current situation of the city;the government needs to actively cooperate with the implementation of the purchase restriction policy,and truly limit the ’ hype ’ atmosphere fundamentally.