Caixin Weekly | Gradual Progress of the Real Estate Presale System (AI Translation)
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文｜财新周刊 陈博 武晓蒙
By Caixin Weekly's Chen Bo and Wu Xiaomeng
文｜财新周刊 陈博 武晓蒙
By Caixin Weekly's Chen Bo and Wu Xiaomeng
实施了30余年的商品房预售制，是否真的会被撼动甚至替代？中国房地产市场供求关系正在发生逆转性调整，昔日盛行的预售制日益呈现不匹配、不适应之处。部分城市在试点现售制两年多后，正逐步在更大范围铺开。这项事关中国房地产发展新模式的制度，如何循序渐进、平稳过渡？
After more than 30 years of implementation, is China's commercial housing pre-sale system truly about to be shaken up or even replaced? The supply and demand dynamics of the Chinese real estate market are undergoing a fundamental reversal, and the once-prevalent pre-sale system is increasingly proving to be ill-suited and mismatched to current conditions. In some cities, after more than two years of pilot programs with the spot-sale system, a broader rollout is now underway. As this policy—central to the development of a new model for China’s property sector—expands, how can a gradual and stable transition be ensured?
2025年5月初，河南省信阳市住建局起草发布《关于加强商品房预售管理工作的若干措施（试行）》，公开征集意见。信阳市提出，以“新老有别”为原则，中心城区新出让土地开发的商品房一律实行现售。
In early May 2025, the Housing and Urban-Rural Development Bureau of Xinyang City in Henan Province drafted and released the “Several Measures on Strengthening the Management of Commodity Housing Pre-sales (Trial),” seeking public comment. Xinyang proposed that, under the principle of distinguishing between new and old projects, all newly developed commercial housing projects on newly transferred land in the city’s central urban areas must be sold on a completed basis, rather than through pre-sales.
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- China is gradually shifting from a decades-old off-plan (pre-sale) housing system to more "completed home" (现售) sales, with 30%+ of new homes sold as completed units by April 2025, up from 10.4% in 2021.
- The transition aims to protect buyers and prevent unfinished projects but imposes financial and operational challenges on developers, requiring longer project cycles and regulatory/financial adaptations.
- Policymakers advocate a phased, region-specific approach, with pilot programs, financing reforms, and supportive policies in multiple cities to ensure market stability and smooth reform.
The Chinese real estate market is currently undergoing significant structural change, most notably in the area of housing sales: the long-standing pre-sale system is being reconsidered, with several cities now piloting or expanding "existing home sales" (现售制) as an alternative. This shift is a response to a reversal in supply-demand dynamics and a growing realization that the pre-sale model, which once fueled rapid expansion, is increasingly misaligned with current market realities [para. 1].
In early May 2025, the housing authority in Xinyang, Henan, released draft measures stipulating that new centrally located residential developments must adopt the existing home sales model [para. 2]. This reflects wider policy direction; China’s Ministry of Housing and Urban-Rural Development has highlighted comprehensive sales system reform—including a push for more existing home sales—as a top priority for 2025 [para. 2]. The pre-sale system, modeled after Hong Kong, was formally established in mainland China in 1994. Under this system, developers could sell units as soon as they obtained a pre-sale permit, enabling rapid capital turnover and fostering a "high-leverage, high-turnover" development approach [para. 3].
Pre-sale funds, collected from buyers before units are completed, are subject to regulatory oversight and intended exclusively for project-related expenses. However, prior to 2021, many developers misappropriated such funds, and local governments—relying on real estate for fiscal revenue—often overlooked violations. The situation worsened after the real estate slowdown began in late 2021, with many projects stalling or failing and consumers left with undelivered or incomplete homes [para. 4].
Recognizing these risks, regulators in 2023 called for conditional expansion of existing home sales and stricter fund oversight for pre-sale projects [para. 5]. The existing home sales model requires developers to complete and certify projects before selling, shifting risk away from buyers [para. 6]. According to CRIC, a real estate research body, more than 30 cities had piloted existing home sales since late 2022. Some introduced new land sale requirements, while others used preferential financing to encourage the transition [para. 7].
Experts agree that existing home sales reduce delivery and financial risks for buyers and strengthen trust in the property market. The model enables "what you see is what you get" transactions, narrowing the information gap between buyers and developers [para. 8]. However, the shift poses challenges for developers: it prolongs project timelines and delays revenue, which can strain finances and force developers to overhaul business models. Notably, pilot programs in cities like Shenzhen have already increased liquidity pressure on developers, as more of the sale proceeds are withheld until later project milestones [para. 9][para. 10].
Longer sales cycles translate directly to higher financing costs for developers, and many may be compelled to break large projects into smaller phases to manage cash flow [para. 12]. Ultimately, this reform could dampen developers’ willingness to acquire land, undermining local fiscal stability [para. 13]. High-profile state-backed enterprises have begun adjusting strategies, but the shift risks generating systemic disruption if widely and abruptly implemented [para. 14].
Adapting financing arrangements is therefore critical. Whereas banks previously based loan repayment schedules on sales progress, under existing home sales these must be tied to more extended project lifecycles [para. 16][para. 17][para. 18]. Financial authorities acknowledge the need—initiatives to extend the lending terms for eligible projects are being explored [para. 19]. However, extending loan maturities must be balanced against banks’ risk exposure, and close regulatory collaboration is necessary [para. 20][para. 21]. Additionally, new mechanisms—like the "white list" program—are being piloted to funnel preferential financing and supervision to qualified projects [para. 24].
Data from China’s National Bureau of Statistics shows that from late 2021 to April 2025, the share of existing home sales in total new home transactions rose from 10.4% to 32.5% [para. 28]. Structural issues within the pre-sale system persist—such as ongoing fund misappropriation—and large-scale adoption of existing home sales may take years [para. 31]. Market experts say that gradual, city-specific rollouts and supporting fiscal, tax, and financial policies are essential to ensure a smooth transition [para. 34][para. 36].
In practice, innovative policies—such as tax breaks, fee deferrals, and buyer subsidies—have been adopted in various cities to encourage uptake of the new model [para. 40][para. 41]. Still, experts recommend a dual-track approach: maintain pre-sales for ongoing projects while requiring new ones to meet more stringent or exclusive existing home sales rules, especially in cities with high inventory and lower land prices [para. 42][para. 43][para. 44]. The overall goal is a stable, market-driven transformation toward a more sustainable and consumer-friendly real estate sector [para. 45].
- United Securities Asset Management Branch
- Wang Song, General Manager of the Investment Research Department at United Securities Asset Management Branch, suggests that the "visible and tangible" nature of ready-built homes reduces information asymmetry between buyers and sellers, fostering fair transactions. He observes higher sales rates in Beijing's pilot projects, indicating that ready-built home sales can boost market activity.
- CRIC Real Estate Research Center
- The CRIC Real Estate Research Center is a market institution that tracks and analyzes the real estate market in China. According to an article from May 2025, the center released a report on May 16, 2025, indicating that the implementation of a ready-built home sales system would demand higher liquidity from developers.
- Poly Developments and Holdings
- Poly Developments and Holdings (referred to as Poly Development in the article) is one of the leading state-owned real estate enterprises in China. In the current real estate market adjustment period, Poly Development, along with other major state-owned developers like China Overseas Property, has adopted a strategy of investing in high-quality residential land in core cities. They aim to recoup funds through sales to address existing debt issues.
- China Overseas Land & Investment
- China Overseas Land & Investment (中海地产) is a state-owned enterprise. In the current real estate market adjustment, it has pursued a strategy of investing in high-quality residential land in core cities, selling properties to recover funds, and using those funds to address existing debt.
- 1994：
- The commercial housing pre-sale system was formally established in mainland China, adopted from Hong Kong.
- Before 2021：
- Many property developers diverted presale funds, and local governments failed to strictly implement regulations for escrow accounts.
- March 7, 2020：
- Hainan became the first province in China to propose comprehensive implementation of the delivery-before-sale system for all newly developed residential land.
- Late 2021：
- At the onset of the real estate liquidity crisis, existing homes accounted for about 10.4% of total commercial residential sales (National Bureau of Statistics).
- After the third quarter of 2021：
- China's real estate sector entered a period of profound adjustment, with highly leveraged developers defaulting and supervision loopholes in presale funds exposed.
- Since 2021：
- The capital recovery cycle for new real estate projects was significantly extended due to a market slump.
- After November 2022：
- People's Bank of China and China Banking and Insurance Regulatory Commission issued the 'Sixteen Measures for the Financial Sector,' allowing banks to approve extensions for development loans for real estate projects.
- End of 2022：
- More than 30 cities nationwide had been designated as pilot locations for existing-home sales since this time.
- Early 2023：
- China’s Ministry of Housing and Urban-Rural Development made its first public statement recommending the sale of completed homes and started a new round of pilot programs for completed-home sales.
- Since 2023：
- Local governments across China rolled out supporting policies to pilot the sale of completed properties in various cities.
- March 2024：
- At the National People's Congress and Chinese People's Political Consultative Conference, Minister Ni Hong emphasized strong and orderly advancement of completed-home sales policy.
- Second half of 2024：
- Shenzhen began exploring the implementation of a 'quasi-live-sale' property model and introduced new regulations delaying mortgage issuance until main structure completion.
- End of 2024：
- The Ministry of Housing and Urban-Rural Development announced that promoting establishment of a new real estate development model would be a key priority for 2025.
- Beginning of 2025：
- Property markets in some core cities continued to recover, with leading real estate developers competing for land at high premiums.
- Early May 2025：
- The Housing and Urban-Rural Development Bureau of Xinyang City drafted and released a document proposing that all newly developed commercial housing projects on newly transferred land must be sold on a completed basis, soliciting public comment.
- May 7, 2025：
- At a press conference, Li Yunze, director of the National Financial Regulatory Administration, announced a package of incremental financial policies to support the new real estate development model.
- May 16, 2025：
- CRIC (China Real Estate Information Corporation) Research Center released a report urging systematic policy design for the transition from the pre-sale to completed-home sales system.
- By April 2025：
- Existing homes accounted for approximately 32.5% of total commercial residential sales (National Bureau of Statistics).
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