Real estate market records in the era of existing homes

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Over the past 30 years, the real estate market has focused on the pre-sale system and pursued a “high debt, high leverage, and high turnover” model. However, during the period of deep adjustment in the industry, sales collections have slowed down, and problems such as misappropriation of pre-sale funds, project suspensions and delayed delivery have emerged one after another.

The Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, and the State Administration of Financial Supervision said in response to reporters’ questions on August 28 that the recent bankruptcy liquidation of Evergrande Real Estate and the public pronouncement of the Xu Jiayin case are strong proof that the shortcomings of the “three highs” model of real estate development and operation have been exposed. To change the “three highs” model, there is an urgent need to reform the commercial housing sales system, strengthen the supervision of pre-sale funds, guide real estate development enterprises to reasonably determine the scale of development and operation based on their own strength, and strengthen risk awareness.

It was against this background that a series of new policies were intensively introduced, trying to outline an ideal picture of a new model of “high-quality real estate development”:

Home buyers bid farewell to the risks of off-plan properties and realize “what you see is what you get”; real estate companies bid farewell to group leverage expansion and turn to product competition and diversified businesses such as construction and operation; banks bid farewell to group-based credit granting and turn to project-based lending and financing tools such as REITs; the government reduces its reliance on land sales and turns to urban renewal, affordable housing construction and inventory revitalization.

The New Deal accelerates the stabilization of the industry by compressing the space for leveraged arbitrage and lengthening the funding cycle. Although in the short term, it will be difficult to directly repair housing prices and reduce inventory, in the long term, under the influence of the New Deal, the real estate industry will return to rationality, and its contribution to the economy will shift from development and construction to residential services, asset management, and stock operations.

It should be noted that the switch of the system will not automatically digest the old problems. High land costs, an inversion between land prices and house prices, and insufficient terminal demand still exist, and there is still a gap between the introduction of policies and the implementation of detailed rules. Regardless of real estate companies, banks or local governments, they all need to go through the pain of transformation.

New rules for sales offices

“What we see now is what we get. If you miss this wave, you will have to wait another two years if you want to buy a new house.”

On the first weekend after the new policy was introduced on August 28, Caijing visited a number of existing and quasi-existing homes in Daxing, Yizhuang, and Chaoyang Districts of Beijing and found that this has become a unanimous opening statement for salespeople.

The New Deal unexpectedly made these properties “beneficiaries”. They have been open for at least a year, the fast ones have been delivered, the main structures of the slow ones have been capped, and some of the value is still on sale. Compared with other real estate projects that only have drawings and dust on site, they are one of the few options that home buyers can “see is believe”.

On the weekend after the “828 New Deal”, at the sales office of Beijing’s Yizhuang Investment Promotion Project, multiple groups of customers were viewing houses. Photography/Wang Wentong

The investment site is located in the core area of ​​Yizhuang, Beijing, close to Yizhuang Longhu Street and Beijing No. 2 Middle School. The unit price is about 66,000 yuan/square meter. The project will be launched in May 2025 and will be handed over in mid-2027. The exterior facade has been capped and the clubhouse has been built. It is in a quasi-existing condition and can be visited by home buyers. In the sales office, many customers gathered around the sand table to listen to the explanation, or sat in the negotiation room or rest area to calculate prices.

This may be the standard configuration of future sales offices after China enters the era of existing home sales. However, for existing pre-sale projects, the 828 New Policy also clearly states that “old projects have the same old methods, and new projects have new methods.”

The criterion is whether the housing project has obtained a construction project planning permit. If it has been obtained, it can be implemented in accordance with the original policy regulations. If it has not been obtained, priority will be given to the sale of existing houses. Moreover, “priority” does not mean “must”. New projects can be sold as existing homes or pre-sold. In addition, the New Deal also implements a deposit system and deposit supervision in cash-for-sale projects.

During the investment promotion process, this property quickly released information about price increases. Liu Nan, a salesperson for the project, told Caijing that he had just received a notice from the leadership that the price of the main unit of 127 square meters would increase by 2% on September 6.

For the higher-end China Merchants Xi project located 1 kilometer away, the salesperson also said that the price would increase soon. The property has been delivered recently. During the viewing process, the salesperson repeatedly emphasized that existing housing projects are more scarce and the price should be higher.

A number of off-plan housing projects including Shanghai, Guangzhou, Shenzhen and other cities have also released price increase signals.

For example, on September 8, Poly Development Shanghai announced that for its three off-plan housing projects, Poly Duhui Hexu, Poly Junyuan, Poly Hongqiao and Zhuojing’an, the selling prices of newly certified buildings will be increased by 1% across the board.

The reason why developers are rapidly increasing prices is related to the “host bank system” and closed fund management system stipulated in the “828 New Deal”.

Through these two systems, mortgage lending has been moved from after capping to after completion and registration, and development loans are also more consistent with the project development cycle: no more than five years for pre-sale projects and no more than seven years for existing housing projects. In addition, the first repayment of principal is in principle postponed until completion and filing. This lengthens the developer’s capital occupation cycle at both the inflow and outflow ends, essentially cutting off the high-turnover path of “rolling development with pre-sale money.”

Liu Nan said that the price of the project was initially lowered to speed up sales. However, after the introduction of the New Deal, the company decided to increase the price to control the flow rate in order to lengthen the sales cycle and make up for the loss in the window period between the land acquisition and the opening of the future. According to its calculations, an increase in the price of a house by 2 percentage points means an additional profit margin of more than 100,000 yuan.

China Merchants Xi Sales also made a calculation: after the New Deal, it takes two to three years for developers to get the land from completion to registration, and during this period, they cannot get back the money through pre-sales. According to his experience, the financing cost of state-owned enterprises is 5% to 6%, while that of private enterprises is about 8%, which is 16% in two years. He believes these costs will eventually be reflected in rising housing prices.

But this enthusiasm is not universal. Many new home agents admitted that the market is currently highly differentiated. Projects with good locations and strong products are more successful, while most projects have average sales performance.

In contrast to the active promotion of developers, there is the hesitant attitude of home buyers.

A client in the investment promotion process believes that the current new housing projects have been on the market for several years, and there are not many options to choose from. It is better to wait for another two years. She and her boyfriend have been looking at houses for more than a year and have already prepared the money to buy a house, but they have been unable to make a decision.

Another important consideration for home buyers is whether to extend the mortgage term.

The “828 New Deal” extended the maximum term of personal housing loans from 30 years to 40 years.

Calculated based on a loan principal of 1 million yuan, a mortgage interest rate of 3.1% (the weighted average interest rate of new personal housing loans in July was about 3.1%), and equal principal and interest repayment methods, after extending the loan period to 40 years, the monthly payment will be reduced by approximately 632 yuan, but the total interest will increase by approximately 200,000 yuan.

Many sales offices have said that customers have already asked if they can extend their stay, but they are still waiting for specific details from the bank.

Caijing consulted a number of banks as home buyers and found that different banks have different age requirements for borrowers. For example, Bank of Communications requires that borrowers under 35 years old can apply for a 40-year mortgage. If the mortgage is older, the loan period will be compressed; the age threshold for China Merchants Bank, Industrial and Commercial Bank of China, and China CITIC Bank is 40 years old.

This means that home buyers under the age of 40 are the main target group of this policy, and this group of people is precisely the group that is more cautious when buying a house.

“I feel it’s not a good deal,” said a customer who recently purchased a wedding home. “I only lost more than 600 yuan a month, and I made up for it by missing a few meals, but I have to pay back so much more.”

The anxiety about price increases in the sales office and the complex mentality of home buyers are the market projection of the 828 New Deal.

A bank credit approving officer believes that customers are now unwilling to use full leverage when buying a house. Coupled with provident fund deductions, the monthly payment diluted by the New Deal seems insignificant.

Yan Yuejin, deputy director of Shanghai Yiju Real Estate Research Institute, told Caijing that this policy is suitable for home buyers whose current income level is under pressure but has greater room for future career development and income growth. It can be used as a tool to deal with early repayment pressure. According to his observation, in actual operation, the vast majority of home buyers will not actually repay the loan for 40 years. Most home buyers will choose to repay the loan in advance or replace it through second-hand housing transactions in about 15 years.

However, according to the Qianjiang Evening News, staff at the Hangzhou Beike Signing Center revealed that on the 10th day after the introduction of the New Deal, a second-hand house transaction case with a 40-year loan appeared on the Hangzhou Beike platform.

In addition to the sales side and the credit side, the toolbox of the capital side has also been spread out. The New Deal introduces a variety of financing channels, including equity, bonds, mergers and acquisitions, REITs and other full-chain toolboxes, covering the entire process of financing, mergers and acquisitions, revitalization and exit.

From local pilot projects to central government setting the tone

The “828 New Deal” did not come out of nowhere. From local pilots to national setting of the tone, this change has gone through a long process.

In the 1980s, the pre-sale system of commercial housing (commonly known as “selling off-plan properties”) was introduced from Hong Kong to the mainland. In 1994, the “Urban Real Estate Management Law” and the “Measures for the Administration of Pre-Sales of Urban Commercial Housing” formally established the legal status of pre-sales. It has been more than 30 years since then. After the housing reform in 1998, pre-sale became the mainstream model of commercial housing sales.

This system allows real estate companies to sell commercial houses in advance before the completion of project construction. House buyers can make house purchase decisions based on planning, design, contract stipulations, etc., and take delivery of the houses at the time stipulated in the contract.

The pre-sale system has accelerated the capital withdrawal speed and development pace of real estate companies, and has become one of the driving forces for the rapid development of the real estate industry.

However, in the absence of strict supervision, it is not uncommon for developers to misappropriate pre-sale funds. Once real estate companies have funding problems, home buyers will face the risk of losing both money and housing. After the real estate industry entered a period of deep adjustment, projects in many places experienced funding gaps, resulting in unfinished projects or delayed delivery.

Industry risks force reforms. In March 2020, Hainan Province clarified that newly transferred land will implement an existing home sales system, becoming the first province in the country to fully implement existing home sales. Its core lies in the “differentiation between old and new”. Land that has been transferred can still be implemented according to the pre-sale system, while newly transferred land must be sold now. This principle provides an important reference for subsequent nationwide promotion.

Beginning in 2023, the pilot program of the on-sale system will be significantly accelerated.

At the National Housing and Urban-Rural Development Work Conference held in January of that year, the Ministry of Housing and Urban-Rural Development proposed that existing homes can be sold in areas with conditions.

In the following two years, policy diffusion accelerated, with Hunan, Guangdong, Anhui, Sichuan and other places making it clear that they would promote pilot sales of existing homes.

On the specific path, each city will adapt to local conditions. Some cities directly set conditions for current sales in individual land transfer links; some administrative regions, such as Xiongan New Area, directly announced the cancellation of pre-sales, implemented current sales, and simultaneously carried out real estate registration reforms; there are also some places that encourage the selection of the best among the “white list” projects of the real estate financing coordination mechanism and guide the implementation of pilot sales of existing homes.

Most places have adopted a “cautious attempt” and “gradual promotion + supporting policy support” has become a common model. Supporting support policies include extending the land transfer fee payment period, providing deed tax subsidies to home buyers, and increasing the provident fund loan limit.

Starting from 2026, the cash-on-sale system will be upgraded from a local pilot to a national-level institutional arrangement.

The “15th Five-Year Plan” outline issued at the beginning of the year clearly stated that the basic systems for commercial housing development, financing, and sales should be improved to “vigorously and orderly promote the sales of existing houses.”

First- and second-tier cities have accelerated their follow-up. On July 29, Nansha, Guangzhou listed the first plot of land under the “Existing House Sales Commitment System”, requiring the winner to commit to selling the existing house, and the local government provided support for the payment of land transfer fees in installments.

A month later, the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, the State Administration of Financial Supervision, the Central Bank, and the China Securities Regulatory Commission jointly issued a final statement.

According to data from Yihan Think Tank, as of June 2026, more than 20 cities across the country, including Guangzhou, Suzhou, and Yantai, have introduced relevant supporting policies to support and encourage existing home sales from multiple dimensions such as land transfers, provident fund loans, and home purchase subsidies. The proportion of existing home sales has increased from 15% in 2019 to more than 35% in 2025.

From the perspective of city level, the cities that have fully implemented existing home sales are mainly third- and fourth-tier cities with greater pressure to remove existing home inventories. First- and second-tier cities are still in the exploratory stage, and are mostly promoted through pilot sales of existing homes in a small number of core land parcels.

The industry has long anticipated the arrival of the “existing housing era” and is just waiting for the boots to hit the ground.

At the 2025 interim results conference of Yuexiu Real Estate, chairman Lin Zhaoyuan said that under the new model of real estate development, the industry will eventually move towards an existing home sales model. This may reduce developers’ willingness to purchase land, or have a certain impact on land sales in a periodic manner.

Xu Rong, President of China Resources Land, said at the performance meeting on August 31, 2026 that the policy will not be “one size fits all” and will give the industry a buffer window period, which will have greater competitive advantages for long-term real estate companies that adhere to sound financial discipline and live within their means.

Along with the institutional changes on the sales side, the credit system is also being reformed simultaneously in order to resolve the chain impact caused by the cash-on-demand system.

The first is the extension of personal housing loan terms.

In 1997, the “Trial Measures for the Administration of Personal Housing Guaranteed Loans” stipulated that the mortgage period should not exceed 20 years; two years later, the “Notice of the People’s Bank of China on Adjusting the Period and Interest Rate of Personal Housing Loans” clarified that the housing loan period was extended from 20 years to 30 years.

After more than 20 years, the “30-year” upper limit has not been adjusted. Until the “828 New Deal”, the upper limit of personal housing loans was adjusted to 40 years.

The second step is to establish a “host bank system” on the bank side.

Qian Jin, the head of corporate affairs at the Shanghai branch of a leading joint-stock bank, explained to Caijing that the “host bank system” refers to the designation of a sponsor bank for a project, with the bank taking the lead in forming a syndicate, or independently supervising the funds of the project, and providing development loans and other financing services to real estate companies.

“To put it simply, if the project makes money, you will be promoted, but if the project fails, you will be punished.” He said.

This system is derived from the real estate financing coordination mechanism that has been operational in 2024, which is the “white list” system that is well known in the market.

The “white list” system will be jointly launched by the Ministry of Housing and Urban-Rural Development and the State Administration of Financial Supervision in 2024. The purpose is to accurately support the reasonable financing needs of real estate projects and help ensure the delivery of housing. At the same time, each bank has also launched its own “whitelist” real estate companies and projects, giving priority to financial support.

Qian Jin told Caijing that in order to ensure the safety of funds, “whitelist” projects generally adopt strict closed management, that is, project funds have separate accounts and operate independently to prevent misappropriation. In order to spread risks, Shanghai stipulates that a single supervision account can only correspond to funds of 20,000 square meters of sales area.

In terms of scale growth, as of the end of 2025, the amount of loans approved for “whitelist” projects has exceeded 7.5 trillion yuan.

However, the “white list” attempts in various places have problems with different standards and fragmentation, resulting in high-quality projects being dragged down by low-quality real estate companies, but the latter are able to expand credit in a disorderly manner.

Therefore, the “828 New Deal” clarified the “host bank system” system at the national level, aiming to change the capital supervision of development projects from “emergency bailout” to “system restructuring.”

Dong Ximiao, chief economist of China Merchants Union, told Caijing that this round of adjustments can be summarized in three aspects: in terms of objects, the shift from “looking at enterprises” to “focusing on projects”; in terms of mechanism, the implementation of the “host bank system” and closed fund operation; in terms of goals, the shift from short-term emergency response to system restructuring.

After the “828 New Deal” was introduced, the scope of the new white list was liberalized, but the logic changed. A senior economist at a large state-owned commercial bank told Caijing that in the past, the white list looked at the qualifications of real estate companies, but the new white list looks at the project itself, such as whether the four certificates are complete, the capital is fully paid, matching collateral can be provided, separate accounts are established and closed management, and there is a construction and delivery plan.

This means that the new policy treats real estate companies of different natures equally, but the hard compliance threshold for the project itself has actually been raised.

Why did the “828 Series New Deal” come into effect at this time?

The main reason is that the supply and demand relationship in the real estate market has changed.

According to Xinhua News Agency, on August 28, in response to reporters’ questions, the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, and the State Administration of Financial Supervision stated that after nearly 30 years of rapid development, the current total volume of second-hand housing transactions has fully exceeded that of new housing, and the real estate market has entered a period of high-quality development with stock improvement and structural optimization.

From the changes on the sales side and development side to the progress of “guaranteed delivery of buildings”, this official judgment can be confirmed.

First of all, the reversal of the sales structure and the continued differentiation of housing prices have announced the arrival of the stock era.

In terms of sales area, according to data from the National Bureau of Statistics, from January to July 2026, the sales area of ​​newly built commercial buildings reached 450 million square meters, a year-on-year decrease of 11.8%; the online second-hand housing transaction area nationwide reached 482 million square meters, a year-on-year increase of 10.2%, which has exceeded the sales area of ​​new commercial buildings.

In terms of housing prices, according to data from the China Index Research Institute, in the first half of 2026, the price of new homes in 100 cities increased by 0.59%, while the price of second-hand homes fell by 2.9%. In July, differentiation continued, with new home prices rising by 0.26% month-on-month and 2.09% year-on-year, driven by the entry of improved properties in some core cities. However, second-hand home prices continued to fall, falling by 0.44% month-on-month and 7.37% year-on-year.

Secondly, the continued shrinking of development investment has forced the industry to shift from incremental development to stock optimization.

According to data from the National Bureau of Statistics, the national real estate development investment amount in 2025 will be 8.28 trillion yuan, a year-on-year decrease of 17.2%, and the investment side has experienced negative growth for four consecutive years. Entering 2026, from January to July, the national real estate development investment amount was 4.30 trillion yuan, a year-on-year decrease of 19.2%.

Thirdly, the effectiveness of the battle to “guarantee the handover of buildings” has cleared the risk obstacles for the introduction of the new policy.

A total of 3.918 million units of the 3.96 million guaranteed-delivery housing units under national key management have been delivered, with an overall delivery rate of 99%. About 7.5 million units of “sold but difficult-to-deliver” housing caused by thunderstorm shutdowns across the country have also been delivered, and the risk of unfinished inventory has been substantially resolved.

Against this background, real estate development, sales, and financing all require a complete transformation.

However, there is still a time lag between the national setting and local implementation. Qian Jin revealed that the details at the head office level of his bank may not be implemented until mid-September. There is a transmission process from when policies are released to when banks, real estate companies, and home buyers actually feel the changes.

Reconstruction of business logic for real estate companies

The “828 New Deal” has substantially advanced the existing home sales system, and the next step will directly affect the land acquisition, construction and sales strategies of real estate companies.

The “New Deal” gives priority to encouraging developers to sell existing homes, and stipulates that after obtaining a construction permit, developers can sign contracts with home buyers and collect a small deposit. However, whether a project implements the existing housing system depends on the specific circumstances, and there is no “one size fits all” approach.

In the past, many cities allowed real estate companies to obtain pre-sale certificates at different points such as when the basement and foundation work were basically completed, and when the main structure was one-third, one-half or two-thirds complete, so real estate companies could receive down payments from home buyers earlier. The “New Deal” also raised the threshold for pre-sales, raising the bottom line for pre-sales to the top of the main structure.

In addition, the time for personal housing mortgages to be credited to the developer’s account has also been delayed until completion and filing. Previously, in principle, in various cities, payments could be made after the main building was capped.

For developers, the most direct impact after the implementation of the policy is the increase in the amount of peak funds occupied. During the construction of the project, expenditures such as land payment, construction and installation payment, and marketing fees continue to occur, but down payments and mortgage funds will enter the project later. Real estate companies need to use their own funds and development loans to cover part of the construction investment that used to be borne by pre-sale funds.

Secondly, the funds are occupied for a longer period of time. Although specific implementation details have not yet been issued by various localities, it is generally believed in the industry that under the new pre-sale system, the cycle from land acquisition to full payment is generally extended to one or two years, and existing home sales may be extended to two or three years.

Changjiang Securities released a special report on existing home sales on June 10, 2025, using a “high-energy city typical project” as a model to calculate: after changing from pre-sales to existing home sales, the cumulative cash flow return time was extended from 20 months to 34 months, which is a delay of 14 months; the net interest rate dropped from 11.4% to 8.6%, and the IRR (internal rate of return) dropped from 17.3% to 6.4%.

In response to this data, Wang Nan, the head of the investment and development department of a local private enterprise, told Caijing that since local detailed rules have not been issued, the supporting reform measures in finance, taxation, land and other aspects of each city are not yet clear, and the profit model is still difficult to calculate. However, he said that the overall calculated profit of many projects is only five or six points, which cannot reach the net interest rate of more than 10% calculated by Changjiang Securities.

The “New Deal” also gave real estate companies some buffer time. The first is that the development loan period has been lengthened. The new regulations require development loans to cover the entire process from the start of construction to completion and filing. The loan period can be up to five years for pre-sale projects and up to seven years for existing home sales projects.

At the same time, the policy requires all localities to simultaneously optimize land supply, land transfer plans and financing arrangements, and meet reasonable financing needs through development loans, equity, bonds, etc.

It has been more than a week since the “New Deal” was introduced, and real estate companies have already begun to take corresponding actions.

One is to speed up inventory clearance on the sales side. Zhang Cheng, a regional executive of a leading real estate company, told Caijing that after the “828 New Deal” was released, the headquarters required all regions to speed up the sales of inventory. An executive from a leading real estate company in Guangzhou also revealed that the company is urgently applying for pre-sale licenses for projects that have obtained construction engineering planning permits (hereinafter referred to as “industrial regulations certificates”).

Its fundamental purpose is to speed up cash withdrawal: existing old projects still use the original rules, which can achieve early repayment. The headquarters also needs to reduce the scale of inventory to reserve a safety buffer for the uncertainty of future sales prices and land prices.

September is the beginning of the “Golden Nine and Silver Ten” period for real estate sales. Statistics from 58 Anjuke Research Institute show that from September 1 to September 7, the average year-on-year increase in the number of new home transactions in first-tier cities was approximately 42%, but the statistics did not mention whether the average price had changed.

The second is to focus more on high-quality land and be more cautious in acquiring land.

After the promulgation of the New Deal, first-tier cities ushered in the first round of land auctions one after another. High-priced land parcels in Shanghai and Beijing both experienced a phenomenon of “bustling during promotions and empty houses during auctions.” The number of real estate companies participating in the auctions was seriously inconsistent with previous expectations.

Chen Xueqiang, research director of the Guangzhou branch of the China Index Research Institute, said that under the influence of the “828 New Deal”, the number of participating companies and the popularity of bidding have declined compared with the previous period, and real estate companies have become more rational in bidding.

But at the same time, competition for a land parcel in Shenzhen was fierce on September 10, attracting seven real estate companies with state-owned enterprise background to sign up. After 250 rounds of bidding, it was finally won by China Overseas Real Estate at a premium of 125%, and the residential floor price exceeded 100,000 yuan.

The advantage of this land in Shenzhen lies in its scarcity, and the supply of new houses in the area has been tight for a long time. In addition, the small scale of the plot is conducive to controlling the pace of construction, and there are no rigid requirements for the construction of talent housing and affordable housing.

Ding Zuyu, chairman of Prime Data Intelligence, recently wrote in an article that under the New Deal, the pace of land acquisition by real estate companies will further slow down, but the overall investment strategy of focusing on first- and second-tier high-energy cities has not changed.

Zhang Cheng believes that in the future, more national real estate companies will become regional companies and shrink the amount of land they acquire. He believes that companies that rely solely on real estate as their main business and lack a second growth curve, even leading real estate companies, will hardly have the opportunity to compete for high-quality land in the past two years.

So far, Quanzhou City in Fujian Province, Xiamen City in Fujian Province, and Lishui City in Zhejiang Province have clearly included “sale of existing homes” in the land transfer conditions in their latest land transfer announcements.

However, Yan Yuejin pointed out that from the current actual operation level, the sales of existing homes are only for individual high-quality plots, so the overall impact on the supply and demand relationship is limited.

The general direction of land acquisition is basically determined, and the supporting measures that real estate companies are most concerned about are currently.

“Currently, off-plan property sales are supported by a complete policy system. To achieve existing home sales, many supporting measures are also required, such as financial and development loan policies.” Lin Zhaoyuan, chairman of Yuexiu Real Estate, said at the 2025 interim results conference.

Developers are currently most concerned about the payment of land payments. Wang Nan said that if the land payment can be paid in batches, for example, part of the land payment can be paid after completion, consistent with the issuance of mortgage loans, it will be of great help to the developer’s cash flow. The current rule is that only after the land payment has been paid, the developer can obtain the construction permit.

There are already local practical cases for this idea. Just on August 28, Guangzhou’s first “existing house sales commitment system” land plot was successfully sold. As supporting support, the government allowed the land transfer fee to be paid in installments. No less than 50% should be paid within 30 days of signing the contract, and the balance can be paid off within two years, which can alleviate the pressure on enterprises to pay early land payments.

In addition to land, Wang Nan said that developers are also very concerned about the situation of development loans and hope that loan interest rates will be further reduced.

This vision may not be easy to realize. The aforementioned senior economist from a major state-owned bank believes that the current new policy does not set a unified value or a hard lower limit for development loan interest rates. Whether interest rates can be lowered later depends on banks’ capital costs, risk pricing and market competition. If high-quality projects become scarce and the asset shortage intensifies, interest rates may fall.

After the issuance of the New Deal, the entire real estate market is still facing many uncertainties, but for real estate companies, there are three changes that have been confirmed so far.

First, we need to change the way we judge land prices. An assistant to the general manager of a local state-owned enterprise told Caijing that the real test of the new policy is the ability of real estate companies to predict the mid- to long-term market. The developer will reconstruct the cash flow calculation model and make more rigorous calculations of future sales pricing to ensure that the project will still be in a reasonable price range after two years; at the same time, it will carefully evaluate the project sale cycle to ensure the smooth return of funds.

The second is to put forward higher requirements for project quality. Purui Digital Real Estate Research believes that the New Deal will further shift the core capabilities of real estate companies from “financing and turnover capabilities” to “product capabilities and operational capabilities,” which is completely consistent with the direction of industry transformation in the stock era.

A project manager of a real estate company in Shanghai said that the project planning logic of real estate companies will further change. Projects that are urgently needed will adopt a pre-sale system to balance funds; improvement projects will be more inclined to sell existing homes, implement them in advance, and obtain premium prices.

“The overall project design capabilities and engineering quality construction capabilities need to be improved to a higher level. Facades, landscapes, and public areas have become hard investments, and customers are willing to pay for delivery certainty. The industry has officially entered the era of product competitiveness,” he said.

The person in charge of the project said that in Shanghai, the decoration standard for a new project of the real estate company he works for has increased from the decoration standard of 1,000 yuan/square meter to 3,000-4,000 yuan/square meter; from temporarily making a model box for display to preparing two, three, or even seven or eight display areas in advance. The exhibition area includes underground clubs, swimming pools, gyms, leisure places for the elderly, slides and bubble balls for children, as well as book bars and other leisure businesses for young people.

In addition, developers’ product layouts and style designs may become more conservative in the future. A former real estate marketer told Caijing that under the off-plan housing system, developers can fine-tune unit layouts based on customer feedback, but this opportunity will no longer exist under the current sale system.

The third is to change the real estate sales model. During the pre-sale system, the opening of the market, garden presentation, and club opening were all important marketing nodes for real estate companies, but under the current sales system, these nodes will be postponed.

“The sales teams of real estate companies are likely to shrink in the next two years, because when they enter the project vacuum period, there will be no continuous stream of new projects waiting to be sold.” Zhang Cheng said, “Real estate companies may rely more on brokerage companies to help sell houses, and do not have a sales team themselves, similar to the American model. The more familiar a brokerage team is in a certain area and can impress the buyers in the region, the more popular it will be in the future.”

As of press time, many state-owned and private real estate companies such as Poly Real Estate, Greentown China, Yuexiu Real Estate, and Longfor Real Estate have not accepted interviews from Caijing.

Banks gain weight

The New Deal changed the role of development loans in real estate development.

During the previous peak period of the real estate market, development loans were mainly used to connect pre-financing (referring to financing before project development) and pre-sale funds. Developers usually first mobilize funds from the group’s capital pool to pay the land price, and then use front-line financing to replace the land payment before the land certificate is obtained.

After the project meets the “four, three and two” requirements (complete “four certificates”, 30% of self-owned funds, and second-level qualifications), the developer can then apply for a development loan to replace early front-end financing.

At that time, most projects only took six to ten months from land acquisition to launch. After obtaining the pre-sale certificate, the down payment and mortgage loan could be withdrawn in a short period of time. These funds would be used to repay development loans and project payments, and the remaining funds would continue to be invested in new projects on a rolling basis.

After the New Deal, due to the slowdown in sales receivables and strict supervision of funds under the cash-for-sales system, projects are less dependent on sales receivables during the development process, and development loans will assume more construction functions.

The role of banks in real estate development is also facing a reset.

Qian Jin told Caijing that the sponsoring bank should not only take the lead in real estate project financing, but also be responsible for the collection and use supervision of real estate development funds, becoming the capital settlement hub for the entire life cycle of real estate development.

For commercial banks, obtaining host bank qualifications means obtaining real estate project settlement funds, locking in all deposits and settlement business of a project in the next few years, and the comprehensive income is much higher than the simple interest difference. However, due to the delay in the issuance of home purchase loans, banks’ new home mortgage scale may face periodic pressure.

He mentioned that the bank has currently given two suggestions. One is to strive for the status of the “host bank” of the project, fully grasp the initiative in development loans and fund supervision, focus on screening project qualifications, and strengthen cooperation with listed real estate companies on development projects.

The second is to give priority to cooperation in newly listed existing housing sales projects, and actively deploy the refinancing and fund-raising supervision business of listed housing companies.

But the bank’s real response was extremely cautious. Many banking industry experts have pointed out that banks’ actual willingness to lend still depends on the branch’s judgment on the cash flow of specific projects, and there will be obvious differences.

Zeng Gang, president of the Tianfu Liyan Financial Research Institute, analyzed in Caijing that policy support can alleviate compliance and accountability concerns, but it cannot eliminate business risks such as downward housing prices, prolonged sell-off cycles, shrinking collateral and higher capital occupation. Large banks may accelerate investment in projects in white lists, core cities and state-owned enterprises based on policy guidance; small and medium-sized banks are more concerned about the regional concentration of real estate companies and their own capital affordability.

He believes that banks may not directly increase nominal interest rates, but may reprice risks by increasing capital ratios, lowering mortgage rates, adding shareholder guarantees, and setting trigger clauses for sales repayments.

Qian Jin said that at present, the bank still only lends to projects within the outer ring of whitelisted companies, and has not broadened the scope yet. According to its disclosure, the bank’s whitelist companies include leading state-owned enterprises and large mixed-ownership enterprises with a central-owned enterprise background.

The core reason for banks’ hesitation is that the risk weight of development loans is still very high.

Lian Ping, president of the International Finance Institute of the Chief Economist Forum, pointed out to Caijing that the risk weight of real estate development loans is 150%, while that of general corporate loans is only 100%. The higher the risk weight, the more risk capital is occupied and the more cautious banks are in investing.

The data bears out this caution. Data previously released by the central bank showed that in the second quarter of 2026, the balance of development loans fell to 12.65 trillion yuan, a year-on-year decrease of 8.5%; the proportion of development loans in commercial bank loans also continued to decline. Lian Ping believes that this is because banks are not optimistic about projects in weak second-tier cities, third-tier and fourth-tier cities, and rarely provide development loans.

Mortgage rates are also shrinking. Lian Ping said that in the past, when real estate companies used mortgage financing, the mortgage rate was usually 60% to 70%, but now it has dropped to less than 60%. The mortgage rate of real estate or land in third- and fourth-tier cities far away from the core urban areas will be even lower.

Under the cash-for-sale system, the overdue risk of development loans has also caused concern.

In the past, developers usually settled the principal and interest of development loans when sales (online signing) or when sales collection progress reached 70%. When the market was hot, the repayment date of real estate companies was usually earlier than the loan maturity date.

However, economists from the above-mentioned major state-owned banks believe that once the spot sale system is implemented, sales, construction and market entry cycles will affect the pace of real estate companies’ repayment of development loans, which may cause real estate companies to overdue.

However, Qian Jin believes that the sale cycle of projects in Shanghai’s core areas generally does not exceed three years, which is far lower than the five-year and seven-year development loan periods set by the New Deal for pre-sale and current-sale projects respectively, and the risk of overdue is not significant.

“In the past, real estate companies would repay their loans early when they had money, but after the New Deal, there may be delays in repayment,” he said.

In addition to risk constraints, whether grassroots banks’ execution capabilities can keep up with the pace of system design is another test.

Dong Ximiao believes that grassroots banks face multiple practical resistances in implementation: In the past, grassroots institutions relied more on collateral and corporate credit assessments, but now they must establish project-level cash flow forecasting capabilities. After the development loan period is lengthened, banks’ capital costs, term structure matching and risk provision requirements will increase.

In addition, under the syndicated loan model, management costs such as coordination by the sponsoring bank and information sharing among members will also increase. Therefore, although the regulatory technology framework has been relatively complete, grassroots banks still need to significantly improve their professional capabilities, system construction and internal coordination, otherwise the effectiveness of closed operations may be affected.

Systems and data are another hurdle.

Lian Ping analyzed that the current information construction of banks is uneven, and there are still information islands between departments and institutions, making it difficult to penetrate the transaction background; there is also a misalignment between internal policies such as definition of rights and responsibilities, assessment standards, due diligence and exemption, and actual implementation.

More realistically, housing construction, taxation, judicial and banking data are not yet fully interconnected, project progress lacks a unified standard, and on-site verification costs are high. Zeng Gang reminded that under such circumstances, the account manager is responsible for both the placement task and the lifelong accountability, which can easily lead to a tendency to not dare to lend or to rely on formal materials.

Combining international experience, Lian Ping extracted four lessons that can be used for reference: first, credit review is independent and is evaluated based on individual projects; second, funds are fully closed and managed to ensure dedicated funds; third, capital thresholds are raised and policy-based financial support is increased; fourth, high risk weights are maintained for loans to real estate companies and risks are managed with a prudent attitude.

Zeng Gang pointed out that for China, the more desirable direction is to strengthen the financing of affordable housing and rental housing, develop long-term fixed-rate products, and establish a standardized mortgage loan transfer market, while retaining the loan-to-value ratio, debt service-to-income ratio and countercyclical capital constraints.

new market equilibrium

In the first half of 2026, second-hand housing is still looking for a bottom, but the downward trend has slowed down; new housing has been underpinned by improvements in key cities and has emerged from an independent market.

The National Bureau of Statistics did not release overall data for the first half of the year. However, according to data from the China Index Research Institute, in the first six months, second-hand housing prices in 100 cities fell by 2.9% cumulatively. Among core cities, Shanghai increased month-on-month for four consecutive months, and Shenzhen turned up in June. During the same period, new home prices in 100 cities rose by 0.59% cumulatively.

In July, the differentiation continued: the price of second-hand housing in 100 cities fell by 0.44% month-on-month and 7.37% year-on-year; the price of new homes increased by 0.26% month-on-month and 2.09% year-on-year, driven by the entry of improved properties in some core cities.

After the New Deal, it is unlikely that house prices will rise broadly.

The main reason is that the core purpose of the New Deal is not to promote rising housing prices, but to reshape the rules of the game in the real estate market. This new policy targets more of the incremental market rather than the existing market, and does not change the supply and demand relationship in the market. As the overall inventory scale of the current market is still large, although the pace of new projects entering the market has slowed down after the New Deal, the existing supply is still relatively sufficient, so it is unlikely that housing prices will rise significantly.

From the perspective of land supply, after the New Deal, the land market will not move towards “land shortage”, but “the total volume will decline and the structure will be adjusted.”

On the one hand, land supply has been contracting for many years. Data from the Ministry of Finance show that the national land transfer fee has dropped from a peak of 8.71 trillion yuan in 2021 to 4.15 trillion yuan in 2025, a decrease of 52.35%; it further dropped to 977.8 billion yuan in the first half of 2026, a year-on-year decrease of 31.5%.

On the other hand, the land supply structure is also continuing to change, focusing more on core cities.

According to data from the China Index Research Institute, from January to July 2026, the top 20 cities in the country accounted for more than 60% of residential land transfer fees. The average premium rates for residential land in first-, second-, and third-tier cities were 21%, 9%, and 3% respectively, while 86% of unsold residential land parcels nationwide were concentrated in third- and fourth-tier cities.

A research report from ProSmart Real Estate believes that leading companies will be more cautious in acquiring land in the short term after the implementation of the New Deal, which may reduce the scale of land supply; however, there is usually a conduction period of two to three years from land acquisition to the formation of salable supply, during which the supply and demand relationship will re-find a balance, and may not be in short supply.

From the perspective of the supply of new and second-hand houses, on the one hand, under the industry strategy of “controlling growth, destocking, and determining sales based on production”, the supply of new houses has been actively shrinking.

According to data from the National Bureau of Statistics, from January to July 2026, the newly started residential area nationwide was 195 million square meters, a year-on-year decrease of 24.6%. Monitoring data from Pro Digital shows that since 2023, the supply and demand ratio of newly built commercial housing (new supply area/transaction area) in key cities across the country has continued to decline and is generally less than 1. By the first half of this year, the supply and demand ratio hit a new low of 0.7, which means that real estate companies are generally reducing the supply of new homes.

On the other hand, second-hand housing has assumed an important supply role and has become the most important supplement to the supply of new housing.

Data from the National Bureau of Statistics show that in the first half of 2026, second-hand housing accounted for more than 50% of the total transaction volume. According to monitoring by Purui Digital, the ratio of second-hand and new home transactions in key 20 cities across the country has increased from basically the same in 2023 to a stable level of 2.3 times in the first half of 2026, including 4.9 times in Shanghai, 3.6 times in Beijing, and 3 times in second-tier cities such as Suzhou, Hefei, and Chengdu.

It should be noted that new homes and second-hand homes are not completely separated independent markets. They form a positive cycle driven by replacement, and at the same time there is a diversion effect of supply substitution.

According to the analysis of the Huachuang Securities Research Report, the average monthly supply area of ​​new homes in 80 cities in the first half of the year has fallen 78% from the high point in 2020 to 9.13 million square meters, but it has not reversed the downward trend in housing prices. “This shows that the continued shrinking supply combined with second-hand housing transactions can still meet the needs of residents.”

The relationship between supply and demand is only one factor that affects housing prices.

Huachuang Securities pointed out in the same research report that the reduction in the supply of new homes may improve the supply and demand relationship of the sector and reduce the marginal impact, but it will not necessarily lead to an increase in housing prices. Factors such as residents’ income expectations and residents’ housing costs/income will have a greater impact.

In other words, there is no obvious “certainty premium” for existing houses yet. According to data from the National Bureau of Statistics, the sales price of existing homes has been generally lower than the price of off-plan homes since 2019, and the gap has widened since 2020. The current increase in the proportion of existing homes is largely due to the slow-moving late sales of “passively converted homes”.

CRIC Research Center said that with the advancement of the New Deal, the proportion of “active existing houses” will gradually increase, and the price system will also be reconstructed. Off-plan houses and existing houses may form a new pattern of “existing house prices + off-plan house discounts”.

However, although the overall impact of the New Deal on housing prices is limited, it will guide real estate companies to return to product strength and quality competition, and will also promote the real estate market to return to rationality.

Ding Meng, chief economist of China CITIC Bank (International), told Caijing that in the long run, the New Deal can stabilize the real estate market by reducing excessive leverage in the housing development market and limiting excessive supply. Objectively, it is also more conducive to maintaining macroeconomic and financial market stability.

To achieve this goal, the policy toolbox needs to continue to expand on both the stock and incremental ends.

Zhang Bo, president of 58 Anjuke Research Institute, told Caijing that the key to the existing market is to bring dormant housing stock back into circulation. On the one hand, we can speed up the acquisition of existing housing for use as affordable housing, and open up the closed loop of “acquisition, renovation, and exit of REITs” to ease the separation of work and housing in guaranteed rental housing; on the other hand, we should implement the trade-in of old houses for new ones, and make good use of policies such as deed tax subsidies, individual tax concessions, and transfers with mortgages to unblock the improvement chain of “selling old and buying new”. At the same time, it is necessary to speed up the allocation of urban renewal funds, and further promote the securitization of existing assets to strive for more optimization pilot projects for rental housing REITs.

The focus of the incremental market is to establish positive incentives for “good houses”. He said that the evaluation of “good houses” can be linked to land transfer, credit support and price registration, so that companies have the incentive to improve quality. In addition, whether the existing home sales system can be implemented smoothly depends on the synchronization of supporting details, including arrangements for land payment installments and full use of the development loan period, which can be advanced with reference to existing pilot projects in some cities and regions.

Yan Yuejin added that incremental policies should also focus on cross-regional interoperability of the provident fund system. This will help release reasonable cross-city housing demand and increase market activity. Recently, Nanjing allowed home buyers from other places without provident fund accounts to use provident fund loans to buy houses, which is a good example.

The real estate market is undergoing a profound transformation from “speed” to “quality”. This change will not be completed overnight. It will take time from the policy framework to the implementation of detailed rules, from business adaptation to market clearing. But the direction is already clear. The real estate industry is shedding its over-financialized appearance and returning to its essence of living.

(At the request of the interviewees, Qian Jin, Zhang Cheng, Liu Nan and Wang Nan are pseudonyms in the article)