China overhauls housing sales to address unfinished homes
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In China, authorities are changing how new homes are sold to reduce the risk of developments being left incomplete. The government is prioritizing the sale of finished homes and tightening control over how developers use money from buyers.
This shift responds to crises like the collapse of Evergrande, a major property developer, and aims to restore confidence among people buying homes. For years, Chinese developers relied on presales, accepting payments for homes before construction finished, to fund projects.
The new rules require buildings to have their main structure completed before developers can begin preselling apartments. They also extend the maximum length of mortgages to 40 years, potentially lowering monthly payments for buyers. While these changes won’t affect projects already underway, they signal a move away from the previous model that allowed developers to use early payments for new ventures.
Analysts note this isn’t a typical stimulus for the property market, but a fundamental change intended to create a more stable system. Although the overhaul addresses vulnerabilities exposed by the ongoing property slump, other factors like weak income and demographic shifts continue to affect housing demand. The reforms are expected to lead to consolidation within the industry, with stronger developers better positioned to access funding.
