China Overhauls Housing Sales with Ready-Built Focus

China’s central government on August 28 issued a sweeping package of policy reforms designed to transform the country’s real estate sales system, prioritizing ready-built (completed) housing sales while tightening presale regulations and overhauling real estate credit management. The coordinated measures, released simultaneously by multiple regulatory bodies, mark one of the most significant shifts in China’s housing market since the presale system was established decades ago.

The policy package includes a three-department notice on improving commercial housing sales systems, a joint opinion from the People’s Bank of China (PBOC) and the National Financial Regulatory Administration (NFRA) on reforming real estate credit management, five trial management measures from the NFRA, and a China Securities Regulatory Commission (CSRC) opinion supporting developer financing through capital markets.

Context: A System Under Strain

The presale system, introduced during China’s housing shortage era, allowed developers to sell homes before construction was complete, using buyer funds to finance building. This enabled the “high debt, high leverage, high turnover” business model that powered China’s property boom but also sowed the seeds of its current crisis.

Since 2021, the sector has experienced a severe downturn marked by major developer defaults, widespread unfinished projects, and falling home prices across most regions. As China News reported, the three departments noted that the presale-dominated, fast-turnover sales system “no longer suits the new stage and new requirements of current market development.”

The urgency is underscored by recent data: real estate investment fell 18 percent year-on-year in the first half of 2026, new construction starts dropped over 23 percent, and new home sales declined nearly 14 percent, according to figures cited by RFI.

Key Provisions of the New Framework

Ready-Built Housing Takes Priority

The three-department notice from the Ministry of Housing and Urban-Rural Development, Ministry of Natural Resources, and NFRA requires that new land parcels and projects without construction permits prioritize ready-built housing sales. Projects with construction permits are encouraged to adopt ready-built sales. The policy also introduces a deposit system for ready-built housing purchases and a “deliver house with certificate” (交房即交证) initiative.

For presale projects, developers must now complete main structure capping before sales can begin. All presale funds—including down payments and mortgage loans—must be deposited in regulated supervision accounts. As Jiemian News reported, Shanghai Zhongyuan Real Estate market analyst Lu Wenxi explained that “setting main structure capping as the presale threshold is mainly to prevent unfinished project risk. After the main structure is capped, the probability of project stoppage and abandonment drops significantly.”

Credit Management Overhaul

The PBOC and NFRA opinion introduces a main bank system (主办银行制) for development loans, assigning each project a single lead bank responsible for monitoring project funds. Development loan terms extend to a maximum of 5 years for presale projects and 7 years for ready-built projects, with first principal repayment occurring after project completion filing.

In a significant shift for homebuyers, mortgage loans for presale properties will only be disbursed after project completion filing, while loans for ready-built properties are disbursed after sales filing. As Xinhua explained, this ensures buyers can “get the house before repaying the loan,” addressing the long-standing problem of “no house yet, but paying mortgage.”

The opinion also extends the maximum personal housing loan term from 30 to 40 years. According to Sina News, Shanghai E-House Real Estate Research Institute deputy director Yan Yuejin calculated that a 1 million yuan loan at 3 percent interest would see monthly payments drop from 4,216.04 yuan over 30 years to 3,581.02 yuan over 40 years—a reduction of 635.02 yuan per month, or about 15 percent.

Five Management Measures and Capital Market Support

The NFRA’s five trial management measures cover commercial housing development loans, personal housing loans, commercial real estate loans, urban renewal project loans, and trust company real estate business. These measures implement the project-centered, main bank system approach with closed-loop fund management across the full real estate lifecycle.

Additionally, the CSRC issued an opinion supporting listed real estate companies in refinancing, mergers and acquisitions, bond issuance, CMBS/REITs, and private equity funds.

Analysis: A Fundamental Shift

Experts view this policy package as the formal end of the “old three-high” model. As Jiemian News reported, Tospur Research Institute co-president Song Hongwei stated that the three departments’ issuance of presale supervision policies “marks the official beginning of the new housing development model under the ‘15th Five-Year Plan’… signifying the end of the ‘old three-high’ model.”

The reforms carry significant implications for all market participants. For homebuyers, the “what you see is what you get” principle eliminates the risk of paying for unfinished homes. For developers, the shift from fast-turnover presale to capital-intensive ready-built sales fundamentally changes the business model, favoring large, well-capitalized firms while pressuring smaller developers. For banks, the main bank system creates stronger accountability and direct responsibility for monitoring project funds.

RFI’s analysis notes that these policies will “repair the industry’s trust crisis” and boost consumer confidence by reassuring homebuyers about project stoppages and delayed delivery concerns. However, the transition period presents challenges—developers face longer capital cycles, and some observers have noted concerns about borrowers potentially still repaying loans into retirement with the extended 40-year terms.

What to Watch Next

As local governments begin implementing these policies in their specific contexts, key questions remain: How quickly will ready-built housing become the norm across different regions? Will commercial banks widely adopt the 40-year mortgage option? And what additional support measures may be needed for smaller developers during the transition?

The policy package represents a deliberate, phased approach to restructuring China’s housing market—a reform that has been brewing since 2023 through pilot programs in over 30 provinces and cities. With ready-built housing sales already accounting for approximately 30.84 percent of total commercial housing sales in 2024 and rising above 35 percent in 2025, the foundation for this transition has been steadily building. The coming months will reveal how effectively these ambitious reforms translate into a more stable and trustworthy housing market.