China Shifts Property Market to Completed Homes in Broad Policy Overhaul

China ordered local governments on Friday to prioritise sales of completed homes over presales, overhauling the housing model to halt a property downturn that has dragged on domestic consumer spending.

The joint directive from the housing ministry, the natural resources ministry and the National Financial Regulatory Administration targets newly transferred residential land alongside parcels sold without construction planning permits.

Rules on land and developer financing

Projects on newly transferred plots must adopt the finished-home sales structure, while sites with existing permits are encouraged to make the transition. Two accompanying notices from financial regulators cleared commercial banks to issue revised development loans and gave securities authorities room to back mergers and restructurings among listed property firms.

The policy overhaul directly attacks the off-plan financing structure that left millions of buyers waiting for unfinished apartments and froze household balance sheets across mainland cities. “The policies announced today are stronger than what the market expected,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management, noting that weak domestic demand stemmed largely from real estate distress.

Impact on consumer confidence and household wealth

Property accounts for the bulk of Chinese household wealth, making housing stability essential for any rebound in retail sales, automotive purchases and consumer services across second-tier and third-tier markets. For consumer brands operating in China, weak property valuations have consistently translated into cautious discretionary spending and higher promotional discounting over the past two years.

Municipal governments must now issue local execution timetables for the finished-home rules, with developers waiting for commercial banks to publish specific loan quotas under the updated development guidelines.