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Current Affairs

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

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 carries a…

By Samantha Johnson / August 31, 2026

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 carries 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 (PBOC), 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-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.

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