China unveils measures to overhaul nationwide home sales process

China is officially moving to end the era of buying apartments that don’t exist yet. The government announced plans to transition the country’s residential property market from pre-sales of unfinished units to a model centered on completed homes.

The reform targets a system that has been in place since 1994, when China adopted a pre-sale model borrowed from Hong Kong. Under that framework, buyers pay for homes months or even years before construction wraps up, effectively lending developers cheap capital.

From blueprints to bricks

Completed-home sales accounted for 32.5% of new-home transactions by floor area in early 2025, a dramatic jump from just 10.4% in 2021.

The Ministry of Housing and Urban-Rural Development, known as MOHURD, has been the driving force behind the transition. The ministry has pushed for expanded completed-home sales as a way to reduce delivery risk and protect purchasers.

Pilot programs rolled out across more than 30 cities starting in late 2022, testing various approaches to making the switch. Policy signals intensified through 2024 and into 2025, with local governments drafting city-specific rules to support the new model. MOHURD has emphasized that reforms should be tailored to local conditions rather than applied as a one-size-fits-all mandate, while simultaneously calling for stricter supervision of pre-sale funds.

By the end of 2025, roughly 7.5 million previously undelivered homes had finally been handed over to their owners. That backlog clearance was supported by a whitelist financing mechanism that exceeded 7 trillion yuan, approximately $1.04 trillion, channeled to ensure stalled projects actually got finished.

Why the old model broke

The pre-sale system worked as long as developers stayed solvent and kept building. When China Evergrande Group collapsed under more than $300 billion in liabilities, it exposed the fundamental fragility of the arrangement. Homebuyers across the country had paid for apartments that existed only as foundation pits and rusting rebar. Some organized mortgage boycotts. Others simply lost their savings.

The Evergrande crisis wasn’t an isolated incident. It was the most spectacular symptom of a development model that incentivized rapid land acquisition and leverage over actual construction. Developers used pre-sale proceeds from Project B to finish Project A, creating a daisy chain that only worked in a rising market.

What developers and buyers face next

The implications for China’s property developers are substantial. Under the pre-sale model, builders effectively received interest-free loans from buyers, using that cash to fund construction. Selling only completed homes means developers need to finance the entire building process before seeing revenue, a fundamental change to their cash flow dynamics.

Guangzhou offers a preview of what the transition looks like at the city level. The southern megacity drafted a plan in mid-2026 targeting steady growth of completed-home sales over a five-year period, complete with bank incentives to help developers adjust to the new financing requirements.

The transition also carries risks for local government finances. Land sales have historically been a critical revenue source for municipalities, and the pre-sale model helped keep that engine running by ensuring developers could recycle capital quickly into new land purchases.

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