China real estate market crisis and reform

China is undergoing a significant transformation in its real estate sector, driven by a housing market crisis and shifting consumer behavior. A long-standing cultural emphasis on homeownership as a symbol of stability is declining as economic slowing and market volatility discourage property investment. New home sales reached a low of 7.3 trillion yuan in 2025, a substantial drop from the 16.2 trillion yuan peak in 2021. Economists have noted that the downward trend “has not yet seen an end.”

In response to these instabilities, the government has introduced reforms to the residential property market. To mitigate the risks associated with the previous pre-sale model—which allowed developers to use buyer funds for construction—new guidelines encourage the sale of completed housing units instead. This shift aims to protect homebuyers and reduce the delivery risks that followed the 2021 market crash and the collapse of major developers. To support this transition, a whitelist financing mechanism exceeding 7 trillion yuan has been deployed to ensure the completion of stalled projects.