BEIJING: China on Friday issued guidelines for local governments to reform their housing sales system, requiring a shift towards the sale of completed housing units to curb delivery risks as Beijing seeks to stabilise the crisis-hit property sector.
Local governments should advance the sales of completed housing units to “fundamentally prevent delivery risks and protect the legitimate rights and interests of homebuyers,” state news agency Xinhua reported, citing the guidelines.
China’s property developers had for decades used a presale model, where homes are sold before project completion, to fund their debt-fuelled and high-turnover operations.
A market crash in 2021, triggered by a government campaign to curb debt in the sector, left many developers cash-strapped and their projects stalled. The presale model became a source of social unrest as homebuyers protested and threatened to stop mortgage payments on unfinished projects.
Some of these projects remain stalled more than five years into the slump, as property developers, including the once No. 1 China Evergrande, defaulted on their borrowings amid falling home prices.
The old housing sales system, which relies primarily on presales and rapid turnover, is no longer suitable, Xinhua said, citing unnamed officials. Changing that model requires reforming the sales system and strengthening the supervision of presale funds, the officials were quoted as saying.
For housing projects to qualify for presales, individual buildings should be topped out, according to the guidelines, which granted leeway for projects that had obtained construction permits before the measures came in.
