China Tightens Rules on Home Presales and Extends Mortgages

Only 17 of 70 China cities tracked recorded monthly gains in new home prices in July.

China has tightened rules governing the sale of homes before completion, seeking to reduce delivery risks for buyers and curb developers’ dependence on presales to fund construction as Beijing tries to stabilise its struggling property market. Under the new measures announced on Friday, local governments have been instructed to “vigorously and orderly promote the sale of ready-to-move-in commercial housing” and strengthen protections for buyers purchasing homes that are still under construction.

What are the new rules?

Mortgages after completion: New lending guidelines from China’s central bank and financial regulator mean housing loans would be issued only after residential projects are completed, reducing developers’ ability to use mortgage proceeds from presold homes to finance ongoing construction. Push for completed homes: Local authorities have been told to promote sales of completed apartments, rather than relying on the traditional model of selling homes before construction is finished. Greater protection for presale buyers: Authorities are seeking stronger safeguards for buyers who do purchase homes before completion, amid years of delays and unfinished projects that have hit households across China. Longer mortgage tenure: The maximum term for personal housing loans has been raised to 40 years from 30 years, potentially lowering monthly repayments and easing the debt burden on homebuyers.

Why does it matter for developers?

China’s developers have traditionally relied heavily on presales, collecting money from buyers before homes are completed and using those funds to finance construction and other operations. The new lending rules could therefore remove an important source of early cash flow. “Developers can no longer rely on early mortgage proceeds to fund construction. Construction-phase funding must come from developers’ own funding, development loans,” Nomura said in a research report. Presales still accounted for 68% of new-home sales by floor space in 2025, according to Nomura, highlighting how significant a shift the new rules could represent for the industry. The measures could particularly pressure developers with weaker balance sheets, while accelerating consolidation in a sector where many private developers have already defaulted.

What does it mean for homebuyers?

The policy shift is aimed at reducing the risk of buyers paying for apartments that are delayed or never completed. A greater focus on ready-to-move-in homes could give buyers more certainty over what they are purchasing. The 40-year mortgage limit could also reduce monthly repayment burdens. “The decision to allow mortgage loans up to 40 years helps to mitigate the home buyers’ debt burden,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. However, longer mortgage terms may not be enough to revive housing demand while concerns over property prices, employment and household confidence persist. Chinese property shares fell sharply on Monday as investors assessed the potential impact of the new rules on developers’ cash flows. The CSI300 Real Estate Index was down 4.6% in afternoon trade, while a gauge of Hong Kong-listed Chinese developers fell 6.5%. The measures come as China tries to revive a property market that has been in a prolonged downturn since authorities cracked down on excessive borrowing and speculation in 2020. The resulting developer defaults and unfinished projects have weighed on household confidence and domestic consumption.