Is there a liquidity crisis in the housing market? Li Tongrong, a housing market trend expert, reminded in May that the market may have experienced an increase in pre-sale cancellations, a freeze in existing home transactions, and an increase in over-disbursement of mortgages, which may have extended to pressure on the capital chain of builders. Five months later, it was verified that it can be summarized as "one rise, two slowdowns, and one prevention", among which the increase in "pre-sale house cancellations" is the most noteworthy.
Li Tongrong said that the increase in pre-sale contract cancellations is regarded as the leading signal of liquidity risk. It often takes several years from the signing of the contract to the handover of a pre-sale house. The financial pressure is limited in the early stage of the contract signing, and the real test usually occurs before and after the handover of the house. When bank valuations are insufficient, loan ratios decline, and credit controls and housing price expectations change, a gap in self-prepared funds may emerge.
The number of pre-sale cancellations has increased significantly in 2026, with more than 500 cancellations in many months from March to July, indicating that the financial endurance and market confidence of some pre-sale buyers are being tested. However, it must be emphasized that the increase in contract cancellations does not mean a comprehensive wave of defaults. The real thing to be vigilant about now is risk prevention, not crisis exaggeration.
Li Tongrong said that the real liquidity crisis in the housing market is not necessarily a sharp drop in prices, but "you want to sell but you can't." However, there will be significant changes in the existing home market in the second half of 2026. After a period of correction, homeowners in some areas began to make price concessions. Price perceptions between buyers and sellers gradually converged. The market sought a new balance between supply and demand through "price concessions and price-for-volume" practices.
In September, 17,945 buildings were transferred in Liudu, an increase of 14.13% from 15,723 units in August and an increase of 11.63% from September last year. The transaction volume in Liudu increased overall compared with August. What is even more noteworthy is that in the first six months of 2026, there were a total of 151,611 buildings, a decrease of only 0.12% compared to 151,796 buildings in the same period last year, almost equaling the same period last year.
Li Tongrong believes that this does not mean that housing prices have reversed, nor can we judge that the housing market has returned to bullishness based only on single-month data, but it at least shows that the "volume freeze" in the second quarter has been significantly alleviated in the third quarter. It also proves once again that a moderate correction in housing prices is not terrible. The real liquidity crisis is when prices and transactions do not move.
As for whether mortgage overpayments will continue to expand? Li Tongrong said that the current housing loan over-disbursement ratio remains at a low level of about 0.08%, which shows that the overall asset quality of bank residential loans is still relatively stable and there is no systemic housing loan default problem. However, the amount of over-loaned mortgages remains relatively high, which means that although the overall financial system is stable, financial pressure still exists for some home buyers who are highly leveraged or have weak capital allocation capabilities.
The last step is that liquidity problems are transmitted from the home buyers to the builders, resulting in a lack of funds and even unfinished buildings. Li Tongrong said that starting from September 18 this year, the central bank will delete the unified requirement that land purchase loans "be subject to the commencement of construction within a certain period of time" and return to banks' own assessment of the reasonable start time of construction based on the credit conditions of each case. The important significance of this adjustment is not just to "relax the 18-month limit", but to prevent builders with weak financial capabilities from being forced to start construction to avoid loan callbacks when the housing market declines and sales are poor.
Li Tongrong said that the liquidity crisis in the housing market did not spread linearly along the path warned in May, but gradually formed a structural differentiation due to self-regulation of market prices and timely revision of policies. There is currently no need for the government to crack down on housing prices or rescue housing prices. The excessive increase in housing prices should have been moderately corrected; reasonable price corrections will also help improve the affordability of buying a house. But "house price correction" and "liquidity crisis" are two different things.
As for the existing housing market in the second half of 2026, Li Tongrong believes that as long as prices are willing to adjust, transactions will have a chance to resume; the real danger is that prices will freeze, transactions will stagnate, and the capital chain will break. The goal of the policy should not be to stimulate housing prices to rise again, but to allow prices to correct normally, to allow transactions to resume flow, to provide reasonable support for normal capital needs, and to prevent the spread of high leverage risks. What the market really needs to observe is whether the pre-sale and contract cancellation pressure can be gradually digested, and whether this pressure will be transmitted to the builders' remaining houses, project promotion and capital chain.
