China's property sector has been in crisis for five years, dragging down growth and leaving developers with around $130 billion in defaults. Now, officials are rolling out new measures to stabilize the market.
The central bank announced that mortgages can stretch to 40 years, up from the previous 30-year limit. Meanwhile, developers can sell stocks and bonds to raise cash, and they will no longer have to pay land fees all at once.
The reforms also target the pre-sales system, where buyers put down money for homes that often take years to build. Under the updated rules, developers will collect minimal upfront deposits, and purchasers retain the right to cancel if construction deadlines are missed. Local authorities must enforce uniform pre-sale standards to mitigate delivery risks.
Recent economic data revealed persistent challenges across China's economy. Consumer spending slowed sharply last month, while housing prices extended their decline. Analysts warn that growth may have weakened further below official targets, leading Premier Li Qiang to demand additional policy support.
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The pre-sales model, once a cornerstone of the market, has eroded public trust as developers failed to complete projects. "The previous sales mechanism for housing - defined by pre-sales and rapid turnover - no longer fits the current market," state media Xinhua noted, describing the reforms as "urgent."
China's property downturn began in 2018 when regulators cracked down on excessive developer debt. The collapse of major firms like Evergrande exacerbated the crisis, leaving millions of homes unfinished and buyers wary. The new measures aim to break this cycle by shifting focus to completed inventory and easing financing constraints.
"The policies announced today are stronger than the market expected," said Zhang Zhiwei, chief economist at Pinpoint Asset Management. "They are a meaningful step in the right direction, suggesting policy makers understand the urgency to stabilize the property sector."
The real test will be whether buyers and developers respond. If the reforms restore confidence, the worst may be over for China's property slump. But after years of broken promises, regaining trust could take more than rule changes. For investors eyeing Chinese real estate or related stocks, the road to recovery just got clearer - but it is still long.
