China Tightens Housing Presale Rules to Reduce Property Delivery Risks

BEIJING, CHINA: China has introduced tighter rules governing the sale and financing of homes before completion, as authorities seek to reduce delivery risks for buyers and limit developers’ reliance on presale proceeds to fund construction.

Under the new measures, local governments have been instructed to promote the sale of completed, ready-to-move-in commercial housing while strengthening protections for buyers purchasing properties that remain under construction. The changes form part of Beijing’s wider effort to stabilise a property market that has faced a prolonged downturn, developer defaults and unfinished projects.

Mortgage Lending Shifts Towards Completed Homes

New lending guidelines from China’s central bank and financial regulator will mean housing loans are issued only after residential projects are completed, reducing developers’ ability to use mortgage proceeds from presold homes as a source of construction funding.

The policy represents a significant change for a market where developers have traditionally relied heavily on presales, collecting payments from buyers before construction is finished and using those funds to support development and other operations.

According to Nomura data cited in the report, presales accounted for 68% of new-home sales by floor space in 2025, illustrating the scale of the industry’s reliance on the model.

Developers will increasingly need to fund the construction phase through their own capital and development loans rather than early mortgage proceeds. The shift could place greater pressure on companies with weaker balance sheets and may contribute to further consolidation within the sector.

Greater Focus on Ready-to-Move-In Housing

Local authorities have also been directed to encourage sales of completed apartments rather than relying predominantly on homes sold while still under construction.

For buyers, the move is intended to provide greater certainty over property delivery following years in which delays and unfinished developments affected households across China.

Stronger protections are also being sought for buyers who continue to purchase presale properties, as policymakers attempt to rebuild confidence in the residential market.

Mortgage Terms Extended to 40 Years

Alongside the changes to presale financing, China has increased the maximum term for personal housing loans from 30 years to 40 years.

The longer repayment period could reduce monthly mortgage costs for homebuyers and ease short-term repayment pressure, although it remains uncertain whether the measure will be sufficient to materially strengthen housing demand.

Concerns around property values, employment and household confidence continue to weigh on the market, despite efforts by authorities to improve financing conditions and reduce risks for buyers.

Property Shares Fall Following New Measures

Chinese property shares declined as investors assessed the potential impact of the rules on developer cash flows.

The CSI300 Real Estate Index fell 4.6% in afternoon trading, while an index tracking Hong Kong-listed Chinese developers declined 6.5%, according to the report.

The reaction reflects concerns over how developers will replace presale financing as the industry adjusts to a model that places greater emphasis on project completion before mortgage funds are released.

China’s property sector has been under pressure since authorities moved to restrict excessive borrowing and speculation in 2020. The subsequent downturn led to defaults among developers and left a number of housing projects unfinished, affecting buyer confidence and wider domestic consumption.

The latest measures indicate a continued shift towards a residential market in which project completion, buyer protection and more sustainable developer financing play a larger role in determining how new housing is brought to market.