“In the end, we will transition to cancel the ‘pre-sale system’.” Lou Jiwei, the former minister of the Ministry of Finance, said in his keynote speech on “China’s Finance and Long-term Economic Outlook” that this is one of the important nodes in the operation of the “three highs” of real estate, and it is estimated that the transition period will take at least a few years.
Although it will take some time to reform the pre-sale system that has been implemented for many years, existing house sales are indeed getting closer to home buyers.
Since the beginning of the year, at the housing and urban-rural construction work conferences held in many provinces across the country, the issue of risk prevention in the real estate industry has been mentioned in unison. Resolving overdue delivery of real estate projects and steadily advancing the work of resolving debt risks of real estate companies is the top priority. In some of these provinces, the sale of existing houses is one of the measures to prevent risks and promote transformation of real estate.
“Guaranteed delivery of buildings” promotes the acceleration of existing home sales
A “loan suspension” incident in 2022, although only exposing the risks of individual real estate companies, has brought considerable impact to China’s real estate market.
In fact, the sale of existing homes does represent the future direction and is one of the signs of the maturity of the real estate market. However, the reform will not be accomplished overnight, but only gradually.
Some people in real estate companies believe that the current home sales are only pilot projects in some cities. Real estate is a capital-intensive industry. Under the current environment, canceling the pre-sale system will further affect the cash flow of enterprises. Therefore, The reform of the pre-sale system cannot be “one size fits all”.
