Summary of the Key Points
The core of the new real estate policy for 2026 is to "relax demand and break the cycle": on one hand, by extending the maximum mortgage period to 40 years, the monthly mortgage payments for homebuyers are reduced (relieving demand); on the other hand, personal mortgage loans are only disbursed after the project is completed and registered (separating the rapid linkage between residents purchasing homes and real estate companies' development financing). Unlike the 2016 policy, which focused on "stimulating demand → rapid cash flow for real estate companies → land acquisition and expansion," this new policy aims to support genuine housing needs while enabling the real estate industry to move towards a more sustainable path of development, reducing its reliance on residents' leverage and high turnover rates.
Key Changes in the New Policy
There are two seemingly contradictory but complementary measures in the new policy:
1. 40-Year Mortgages: Reducing the Burden on Homebuyers
Extending the mortgage period to 40 years directly results in lower monthly payments. For example, for a house worth 1 million yuan with a 300,000 yuan down payment and a 700,000 yuan loan at a 4.5% interest rate, the monthly mortgage payment would be around 3,547 yuan over 30 years, but it drops to 3,143 yuan over 40 years, saving more than 400 yuan per month. This is more beneficial for young professionals or families with lower incomes, making it easier for them to purchase a home.
2. Delayed Mortgage Disbursement: Preventing Real Estate Companies from Using Homebuyers' Money in Advance
In the past, banks would disburse mortgage loans to real estate companies as soon as a pre-sale house was completed. Now, the loan is only granted after the house is fully built and registered by the government (equivalent to obtaining a "certificate of completion"). This means that real estate companies cannot use the homebuyers' loans to acquire land and build new buildings in advance; they must fund the construction themselves.
Why This is Not a Copy of the 2016 Policy?
The 2016 policy aimed to "stimulate demand, leading to rapid expansion by real estate companies." However, four circumstances have changed:
1. Slower Population Growth and Urbanization
In 2016, the urbanization rate was 57%, with an annual increase of 21.82 million urban residents; by 2025, the urbanization rate is expected to reach 68%, with only an additional 10.3 million residents—meaning the growth in housing demand has significantly slowed down, and further stimulation will not have the same explosive effect as before.
2. Higher Resident Leverage
The proportion of residents' debt relative to their income was 44.8% in 2016 and has now risen to 61.5%. Residents already have a significant amount of mortgage debt, leaving limited room for further leverage and higher risks.
3. Shift in Demand for Second-Hand Homes
In the first half of 2026, the transaction volume of second-hand homes in key cities exceeded that of new homes, with 18 provinces seeing more second-hand sales than new homes. When residents upgrade their housing, they may not necessarily buy new homes, so even if mortgage demand increases, it will not all flow into the pockets of real estate companies.
4. More Rational Land Supply
The new policy requires a "reasonable" land supply, avoiding the reckless sale of land as in the past. Even if new homes sell well in some cities, real estate companies must consider population and inventory levels before deciding to acquire land and start construction, preventing blind expansion.
Where Do Real Estate Companies Get the Money Now?
With the delayed mortgage disbursement, real estate companies cannot rely on homebuyers' loans to fund their construction. They must find new sources of funding:
1. Use Their Own Capital First
Real estate companies must use their own funds to acquire land and initiate projects, rather than relying on bank loans to pay for land. This may make it more difficult for smaller companies to survive, giving a competitive advantage to larger, more established firms.
2. Longer Development Loans
Banks have extended the terms of development loans for real estate companies: pre-sale projects can get loans for up to 5 years, and completed projects for up to 7 years, with the loans lasting until the project is finished. In the past, real estate companies could use mortgage payments from homebuyers to repay their loans early; now, they must wait until the buildings are completed.
3. Financing from Capital Markets
Listed real estate companies can raise funds by issuing stocks or corporate bonds. Completed commercial properties (such as shopping malls) and rental housing can be packaged as REITs (Real Estate Investment Trusts) for sale, with the proceeds used to build new homes. These funds come from "professional capital," not from ordinary homebuyers.
How Can Real Estate Companies Make Money Without High Turnover?
In the past, real estate companies relied on high turnover rates to profit: they would sell one project, use the proceeds to acquire land for another, and then use the proceeds from that project to invest in another. This strategy is no longer feasible. They must adapt their methods:
1. More Precise Land Acquisition
Rising housing prices in the past could cover the cost of expensive land, but this is no longer the case. Choosing the wrong location can lead to significant losses if the land cannot be sold. Real estate companies must carefully consider factors such as population growth, competition, and future resale prices.
2. Better Quality Products
After the sale of completed or nearly completed homes, consumers can directly evaluate the layout, lighting, and quality of the buildings. Poor-quality products will not sell, tying up capital. Therefore, real estate companies need to shift from focusing on quick launches to producing high-quality products.
3. Lower Costs
They must reduce construction costs, management expenses, and financing interest. This includes using more efficient construction methods, negotiating lower prices with suppliers, and utilizing lower-cost financing options.
The Ultimate Goal of the New Policy
The ultimate goal of the new policy is to make the real estate industry more sustainable:
- For Residents: To enable them to purchase homes reasonably without bearing excessive monthly payments.
- For Real Estate Companies: To earn profits through quality products and solid business practices, rather than relying on aggressive financial strategies.
- For the Market: To avoid extreme fluctuations and reduce financial risks.
In short, the policy aims to transition the real estate industry from rapid expansion to high-quality development—homes must still be built, but they must be well-designed and reasonably priced, without the reckless expansion of the past.
Such policy adjustments essentially return real estate to its fundamental purpose of providing shelter, rather than serving as a tool for speculation. For ordinary homebuyers, the pressure of purchasing a home is reduced; for real estate companies, they must adapt their business models; and for the entire market, it leads to greater stability.