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Emma Ma

With China rolling out a stronger-than-expected package of measures to transition the housing market away from a presales model, analysts said the shift is a double-edged sword for real estate developers: tighter regulations are poised to squeeze cash inflows, even as the reforms aim to stimulate sales and stabilise prices over time.
Under new rules released by the People’s Bank of China, presales would remain in effect but down payments and mortgage funds would be disbursed to developers only when residential projects are fully completed. Previously, developers could already access these funds when buildings were topped out.
“From structural topping out through practical completion, residential projects take six to 12 months, depending on building height,” said a private developer on condition of anonymity, citing the sensitivity of the matter. “This will substantially delay fund disbursements and weigh heavily on our cash flow.”
Official data from the National Bureau of Statistics showed funds secured by property developers totalled 4.57 trillion yuan (US$679.98 billion) in the January-July period. Deposits and advance receipts and mortgage proceeds stood at 2.04 trillion yuan, accounting for 44.6 per cent of the total funding pool. The share surpassed the 36.1 per cent coming from self-raised funds.
“The PBOC’s new rules serve as a major near-term negative catalyst for developers across the country,” said Fang Chengqi, chief analyst at Zhejiang province-based Caitong Securities, who estimated that developers’ average levered return on investment could drop by about 60 per cent.
“Going forward, the market will increasingly be dominated by large-scale central and local government-owned developers with low leverage and solid financing access. Small regional players carrying very low leverage will also survive. Aggressive mid-tier private developers – such as Sichuan-based Bontop Group – are likely to fall by the wayside,” Fang noted.
Reflecting immediate market anxiety, developer stocks came under heavy selling pressure in Hong Kong on Monday. Large-cap firms such as Beijing-based China Jinmao Holdings, Zhejiang-based Greentown China Holdings and Yuexiu Property headquartered in Guangzhou, tumbled more than 10 per cent in morning trading.
A source from the mortgage business of a state-owned bank, who maintains close contact with financial regulators and spoke on condition of anonymity, said regulators and lenders had been discussing the new rules – announced by the PBOC on Friday – for some time.
With slower capital turnover and shrinking cash on hand, new home supply is set to shrink over the long run
Fang Chengqi, Caitong Securities
“Regulators are well aware of the negative fallout for developers,” the source said. “By comparison, reassuring homebuyers that their homes will not become stalled projects and thus shoring‑up confidence in new‑home purchases carries greater priority.”
The National Financial Regulatory Administration said in a statement on Friday that the reforms would help to “fundamentally protect homebuyers’ legitimate rights and interests”.
Alongside the new financing framework for developers, regulators also extended the maximum mortgage term from 30 to 40 years, among other measures. The policies would better support new home sales, according to analysts.
“With slower capital turnover and shrinking cash on hand, new home supply is set to shrink over the long run. Coupled with new mortgage rules that ease homebuyers’ financial burdens, new home prices will see steady gains, especially in first- and second-tier cities,” said Fang of Caitong Securities.
However, Fang noted that the impact on pre-owned home prices was expected to be limited, with mid- to high-end resale properties that compete directly with new homes unlikely to see a price rebound.
“The reform was inevitable,” said Cui Ji, deputy director at Shanghai-based property consultancy E-house China Research and Development Institute.
“During the previous housing boom, relentless price appreciation incentivised homebuyers to prepay for off-plan units and wait for project completion as a bet on future value gains,” Cui explained.
“Now that real estate has been stripped of its financial attributes, the housing market has returned to its fundamental consumption nature. A prepayment‑based transaction without any form of risk compensation is economically untenable, calling for corresponding regulatory adjustments,” Cui added.
Song Yu, chief China economist at UBS Securities, said in a note on Monday that the new policies could lead to weaker new housing starts and lower supply, helping stabilise prices and reduce inventories.
“While the move happened amid more signals of policy loosening, we see it more as an institutional restructuring than as policy loosening,” Song said.


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Beijing aims to restore buyer confidence, trading near-term financial pain for some developers for long-term market stability, analysts say


Beijing aims to restore buyer confidence, trading near-term financial pain for some developers for long-term market stability, analysts say.


What do China’s new housing presale rules mean for real estate developers?

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Beijing aims to restore buyer confidence, trading near-term financial pain for some developers for long-term market stability, analysts say

Beijing aims to restore buyer confidence, trading near-term financial pain for some developers for long-term market stability, analysts say