China tightens rules on home presales and mortgages
China announced measures that restrict mortgage lending until residential projects are completed, order local governments to promote ready-to-move-in apartment sales, and strengthen protections for buyers who purchase homes before completion; the maximum personal housing loan term was also raised to 40 years from 30. The changes aim to reduce the risk of buyers paying for delayed or unfinished apartments and to curb developers' dependence on presales for construction funding. Analysts warn the shift will remove an important early cash source for developers, could pressure weaker firms and accelerate sector consolidation, while Chinese property shares fell sharply on the announcement.
Mortgages will be issued only after residential project completion.
Context
China's property market has been in a downturn after a 2020 crackdown on excessive borrowing. Many developers relied on presales to fund construction and some defaulted. The new rules may force developers to use their own funds and could…
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