China Ties Presale Home Sales to Topping Out
China has launched one of the most significant overhauls of its property sales system in decades, requiring presale homes to be structurally topped out before they can be marketed — a move aimed at protecting homebuyers and stabilizing the world’s largest housing market.
The reform was set out in a Notice on Improving the Commercial Housing Sales System, jointly issued on 28 August 2026 by the Ministry of Housing and Urban-Rural Development (MOHURD), the Ministry of Natural Resources, and the National Financial Regulatory Administration (NFRA). It took effect the same day, Xinhua News reported.
A Gradual Shift, Not a Ban
A central point often lost in coverage: the reform does not abolish presale. Instead, it tightens the conditions under which it may occur while steering new projects toward finished-home sales.
Under the notice, presale units may only be sold after the single building’s main structural frame is topped out — a much later stage of construction than the old rules allowed. As Xinjingbao reported, new land parcels, and land already transferred where a construction planning permit has not yet been obtained, will prioritize finished-home sales; projects that already hold a construction planning permit are merely encouraged to adopt them.
The reform is explicitly non-retroactive. Projects that obtained a construction planning permit before the notice took effect follow the old rules — a new projects, new method; old projects, old method arrangement designed to avoid a cliff-edge collapse in supply.
Buyer Protections Tightened
For projects that continue to sell presale units, the rules governing buyer money are substantially stricter. Down payments and personal housing loan funds must all be deposited into a dedicated escrow account, supervised by local housing fund agencies, and the supervision is lifted only after the project passes completion inspection and utilities are ready for delivery.
Personal housing loans tied to presale units may be released only after the project completes its completion filing — a mechanism officials summarize as get the house, then repay the loan. If a developer defaults and cannot deliver on time, buyers have the right to rescind the contract, and the developer must refund the purchase funds and bear liability.
The notice also pushes hand over keys, hand over title, promoting the issuance of property certificates at the moment of delivery to address the long-standing problem of buyers waiting years for ownership documents.
Credit Rules Rewritten
Alongside the sales notice, the People’s Bank of China and the NFRA issued supporting credit documents, including trial measures for personal housing loans, development loans, and commercial property loans, as CNR detailed.
Two changes stand out. Personal housing loan terms were extended from a maximum of 30 years to 40 years, and the monthly total debt-to-income ratio cap was loosened from 55% to 60%.
Chen Wenjing, policy research director at the China Index Academy, calculated that a 1 million yuan loan at 3% annual interest, repaid on an equal principal-and-interest basis, would see its monthly payment fall from about 4,216 yuan to about 3,580 yuan — a reduction of roughly 636 yuan, or 15.1%, per month.
On the development side, the notice introduces a lead bank system: one project, one lead bank, chosen bilaterally. Development loan terms match the project’s construction and sales cycle — up to five years for presale projects and up to seven years for finished-home projects. Crucially, the first principal repayment date falls, in principle, after the project’s completion filing, and sales proceeds are prioritized for repaying that project’s development loan.
Why Now
Officials frame the reform as a response to a fundamental shift in China’s housing market. After nearly 30 years of rapid development, the supply-demand relationship has changed: second-hand transactions now fully exceed new-home transactions, and the market faces structural oversupply.
The past system of presale-dominant, rapid-turnover commercial housing sales no longer fits the new stage and new requirements, an official from MOHURD said, according to Xinhua. The reform seeks to move developers away from the old high debt, high leverage, high turnover model that produced delivery failures and eroded buyer confidence.
Wu Jing, director of the Real Estate Research Center at Tsinghua University, put the shift in consumer terms: demand has moved from whether there is housing to whether it is a good house. Lighting, ventilation, sound insulation, and public spaces, he noted, are hard to fully perceive on a drawing. Only by walking into a completed house can buyers purchase a good house that best meets their needs.
Wu added that buying a home has returned from a judgment about a future promise to the selection of a real commodity.
The Deposit System and a Misread Rule
One frequently misread provision concerns the deposit system for finished-home sales. Chai Qiang, a member of the National Committee of the CPPCC and executive vice president of the China Real Estate Valuers and Agents Association, clarified that the rule does not mean sales can only begin after a house is fully built. Once a construction permit is obtained, a developer may sign a deposit contract and legally collect a small deposit, monitored by local authorities.
For the developer, a deposit locks in buyers and reduces market risk; for the buyer, it locks in the unit and price in advance, easing upfront purchase capital pressure, Chai said, as reported by China Construction News. He pointed to Hainan Province, which implemented finished-home sales across the board, and Jingmen in Hubei Province, which piloted the approach, noting that neither saw an industry downturn.
What to Watch
Analysts broadly agree the transition carries near-term risks. Dong Ximiao, chief economist at Zhaolian and executive director of the Shanghai Finance and Development Laboratory, noted that because new projects can only be sold from land acquisition to topping out, sellable new-home supply will phase-shrink. But he argued current supply is abundant enough to absorb the effect, and that a second-hand market acting as a reservoir plus longer mortgages can cushion the demand side.
Pu Zhan, deputy director of MOHURD’s Policy Research Center, called the current moment a key window for reform, arguing that slowing new supply during a destocking phase will help stabilize the market and improve buyer confidence.
The longer-term signal is consolidation. Financially sound developers with strong product capabilities are expected to gain, while marginal players exit — a good money drives out bad outcome that officials present as the foundation of a healthier, higher-quality market. Whether that transition unfolds smoothly, and how local governments manage the timing of land-transfer revenue, will be the tests ahead.