Housing officials have reiterated their intentions to expand sales of fully finished homes – rather than half-built homes – in a bid to protect buyers and stabilize the sector. Stressing that a host of measures are being taken in the real estate industry to restore confidence and ensure the timely delivery of finished homes to buyers, authorities said that sales of finished homes will be “vigorously and orderly” expanded in more locales. For selected projects, the sale of finished homes will be stipulated when land is auctioned. “Many localities have launched a number of trial projects to sell fully finished homes and have explored the reform of the housing sales system. Joint efforts are also being made to uphold homebuyers’ rights and interests and to help developers get funding to complete projects,” Dong Jianguo, Vice Minister of Housing and Urban-Rural Development, said.
Beijing’s emphasis on selling finished homes is a rectification of the once-rampant practice of Chinese developers launching home sales when units were not built, or even before construction had started. Homebuyers who made down payments have often faced project delays or developer defaults. The country has seen a spike in project failures and delays in home deliveries amid the sector’s downturn. The emphasis on selling homes only upon their completion is putting more strain on the cash flow of numerous developers, but the move has been hailed by homebuyers as a means of restoring lost confidence and shoring up transactions.
Investment in real estate development saw a year-on-year decline of 10.2% in the first seven months of 2024, constraining fixed asset investment (FAI) growth. Meanwhile, home sales across the country plunged by 25.9% through July, year-on-year. Officials also reaffirmed that measures will be implemented to guarantee timely home deliveries to buyers plagued by project delays and developer defaults, and that qualified builders are ensured access to easier funding under a so-called white list arrangement.
The property sector used to be a major growth driver, underpinning the economy by contributing to around a quarter of China’s gross domestic product (GDP) if the output of related industries, including construction, is tallied together. Last year, the proportion of property added value accounted for about 6% of GDP. Now the sector is dragging the nation’s economic recovery and straining developer and local government finances.
Beijing has called for lower mortgage rates and down payments, amid other property-easing measures, in a bid to galvanize the market. Last month’s Third Plenum of the Communist Party's Central Committee also vowed to accelerate the establishment of a new model for the sector. The Ministry of Housing and Urban-Rural Development has identified 3.96 million unfinished homes in troubled projects nationwide that are due to be delivered to their buyers by year’s end, as per sales contracts. Minister Vice Minister Dong said 5,300 “white list” projects across the country had received CNY1.4 trillion worth of loans for their timely completion, the South China Morning Post reports.
