China Shifts Away From Housing Presale Model to Bolster Property Market

Beijing released a package of guidelines that require home-buyer mortgages to be disbursed only after a housing project is completed. Local governments are instructed to prioritize sales of finished units, and each development must have a lead bank that monitors and provides financing. The rules also extend the maximum term for personal mortgage loans from 30 to 40 years. The reforms aim to reduce delivery risks, protect buyers, and restore confidence in a sector that has been in decline for more than five years.

Nikkei Asian Review

For decades Chinese developers have relied on selling apartments before construction is finished, using the pre-sale proceeds to fund debt-heavy operations. A market collapse in 2021 left many projects stalled, prompting protests and eroding consumer sentiment. A government campaign to curb developers’ borrowing subsequently triggered a liquidity crunch, causing home prices to fall, investment to plunge, and the broader economy to lose a key growth engine.

Nikkei Asian Review

State media Xinhua quoted unnamed officials saying the old presale system is “no longer suitable” and that reforms must strengthen supervision of presale funds. The People’s Bank of China and the National Financial Regulatory Administration (NFRA) emphasized that financing must be linked to a lead bank and that financial institutions should meet developers’ “reasonable financing needs.” The securities regulator pledged support for listed developers through refinancing, mergers and restructuring, and pledged to enforce delisting rules and improve bond-default resolution tools.

Nikkei Asian Review

Jeff Zhang, an equity analyst at Morningstar, warned that the measures are likely to favor large developers with ample liquidity, as they can absorb longer sales cycles and extended mortgage terms. Conversely, Centaline Property analyst Zhang Dawei argued that smaller developers with limited cash reserves may be forced out of the market or compelled to alter their business models. The shift away from rapid turnover is intended to curb debt accumulation but could reshape the competitive landscape of China’s real-estate sector.

Nikkei Asian Review

• “The policies announced today are stronger than what the market expected,” — Zhang Zhiwei, president and chief economist at Pinpoint Asset Management

South China Morning Post