China is intensifying its efforts to reform the housing market, a sector that has been in a five-year downward spiral marked by plummeting property values and developers facing collapse. The government's first major policy response to a deepening economic slowdown in July involves mobilizing an often-overlooked housing provident fund, worth 10.9 trillion yuan ($1.6 trillion). Effective next month, residents will be able to withdraw these savings for significant housing-related expenses, such as renovations, and restrictions on using the fund for rent payments will be eased. This move aims to unlock liquidity and support a more stable property market.
In parallel, China is pushing for a significant shift in its housing sales system, moving away from the traditional pre-sales model, where homes are sold before or during construction. The Ministry of Housing and Urban-Rural Development is advocating for "sales after construction," with pilot programs in cities like Beijing, Suzhou, and Hefei showing notable results. The proportion of completed home sales in the new home market has risen from 10.4% in 2021 to 18.7% in 2023, and further to 26.7% in the first half of 2024. Analysts project this figure to reach around 30% this year, signaling a transition from a "high leverage and high turnover" model to one focused on "low leverage and greater focus on operation.
The property crisis has been severe, with government-linked developer China Vanke Co. reporting a record 89 billion yuan ($13 billion) annual loss last year, bringing its combined losses over two fiscal years to more than 130 billion yuan. This follows the delisting of property giant China Evergrande Group in August 2025. Despite the challenges, there are some signs of activity, with frenzied land bidding observed in prime cities like Shanghai, where state-backed developers recently engaged in a 200-round bidding contest for a residential parcel in the Yangpu district. These reforms reflect a broader strategy to meet people's demands for better homes through improved policies in financing, taxation, land, and sales.
