Pilot Programs Expand as Cities Explore Alternatives to Presale System
BEIJING – Xinyang in Henan province has become China’s first city to mandate completed-home sales for all newly auctioned land parcels, marking the latest development in the country’s cautious transition away from its decades-old presale system. The move comes as policymakers seek to reduce financial risks while improving housing quality standards.
The Emerging Completed-Home Sales Model
Unlike presales where buyers purchase unfinished properties, completed-home sales require developers to:
- Finish construction and pass inspections before marketing
- Provide immediate occupancy and property ownership
- Allow full visual inspection of actual units
“This ‘what-you-see-is-what-you-get’ approach significantly reduces consumer risks,” said Li Dong, a researcher at Tsinghua University’s Urban Governance Institute. “It eliminates concerns about project delays, quality issues, or developers going bankrupt mid-construction.”
Regional Experiments Gaining Traction
Multiple localities have launched pilot programs with varying approaches:
| Location | Policy | Results |
|---|---|---|
| Hefei, Anhui | Selected pilot projects | Testing market response |
| Jingmen, Hubei | First batch of projects | 90% presale rate achieved |
| Ganzhou, Jiangxi | Extended payment terms | Improved developer liquidity |
Completed homes now account for 36% of new home sales nationally, up from less than 20% five years ago according to industry data.
Implementation Challenges Remain
The transition presents significant hurdles:
- Developer financing: Requires 2-3 years of upfront capital versus 6-12 months for presales
- Local government coordination: Needs synchronized land, tax and financial policies
- Regional disparities: Tier 1 cities adapt more easily than smaller markets
“We’re seeing a natural market evolution toward higher quality and lower risk,” said Chen Wenjing of China Index Academy. “But the shift must be gradual to avoid destabilizing the sector.”
Global Precedents Inform Chinese Approach
International models show varied approaches:
- United States: Escrow accounts protect buyer payments
- Japan: 60%+ completed sales in major cities
- Germany: Strict progress-based payment schedules
Analysts predict China will develop a hybrid system, maintaining regulated presales in some areas while expanding completed-home requirements. The transition timeline remains uncertain, with most experts projecting a 5-10 year adjustment period as financial systems and developer business models adapt.
The reforms ultimately aim to rebalance China’s property sector toward sustainable development after years of debt-fueled expansion. As policymakers emphasize delivering “good quality housing,” the completed-home model offers a path to rebuild consumer confidence while encouraging more responsible development practices.
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