China is considering banning pre-sales of homes, requiring developers to sell only completed properties to reduce risks and stabilise the housing market.
The proposed reform is part of a “new model” of real estate development being formulated by the central government, though details are still being finalised.
The rule would apply only to future land sales, excluding public housing, with local governments allowed implementation flexibility.
The move aims to limit new housing supply and prevent further price declines, especially in smaller cities where the downturn has been more severe.
China’s pre-sales system fueled excessive supply and developer debt, leading to unfinished projects and mortgage boycotts.
Around 90% of homes were pre-sold in 2021, falling to 74% in 2023, but developers remain reliant on advance payments for cash flow.
Analysts warn the ban may exacerbate funding strains, slow land purchases, and curb new construction and investment.
The government has pledged to accelerate supportive financing mechanisms for this new model, though details remain sparse.
April data showed new-home sales from top developers fell 8.7% y/y, adding urgency for reform amid weak demand and fresh U.S. tariffs.
Over 30 cities have already piloted finished-home sales, and the central government signaled it will promote this nationwide in 2025.
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The info was out Thursday ICYMI.
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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