Summary of Key Points
The State Council's classification of housing as a "major durable consumer good" is not a signal of market rescue, but rather an acknowledgment of the fact that the real estate market has already undergone a process of "de-assetization." Houses have long since shifted from being investment assets to mere items for use—just like cars and household appliances, which depreciate over time and require ongoing maintenance and cost. However, this recognition will trigger three major chain reactions: changes in how banks value mortgage collateral, shifts in family asset allocation strategies, and modifications to the financial models based on urban land use. Moreover, the degree of "consumerization" varies across cities—first-tier cities still retain some investment characteristics, while third- and fourth-tier cities have fully transformed into consumer markets. The real estate industry is also moving from a focus on selling houses for profit to creating products and managing existing properties.
1. It's Not About Rescuing the Market!
Many believe this move is intended to revive the real estate market, but in reality, the de-assetization process has already taken place:
- Continuing housing price declines: Prices of second-hand homes have been falling for 27 consecutive months; in June 2026, prices dropped in 88 cities, with third- and fourth-tier cities experiencing a year-on-year decline of 7.48%.
- Difficulty in selling properties: In 2025, 719,000 properties were listed for auction but only 169,000 were sold (a 65% failure rate), and the number of listings increased by 20% in 2026.
- Banks becoming more cautious with lending: The balance of personal mortgages at the six major banks has decreased for three years, totaling a reduction of 1.88 trillion yuan, with mortgage default rates at Bank of Communications and Industrial and Commercial Bank of China exceeding 1%.
- Developers reducing investment: Real estate investment dropped by 17.2% in 2025, and new construction area has returned to 2004 levels (70% lower than its peak in 2019).
The policy simply formalizes these existing trends rather than attempting to steer the market in a particular direction.
2. The Term "Major Durable Consumer Good" Changes the Status of Houses
Previously, the phrase "housing is for living in, not for speculation" meant preventing speculation; now, by classifying housing as a durable consumer good, it acknowledges that it is not an investment asset. This change shifts the entire narrative:
- Similar to cars and appliances: Once purchased, houses are used and depreciate over time, requiring maintenance costs (such as property fees and repair funds), and selling them often results in losses.
- All policy initiatives reflect a consumer-oriented approach: Plans focus on building better-quality housing, renovating old neighborhoods, and improving property services—none of these aim to facilitate profit through speculation.
3. Urban Differentiation: The Process of Consumerization Is Gradual
Not all cities are equally affected:
- First-tier cities: Housing still retains some investment value; for example, second-hand home sales in Shanghai increased by 23% in June, with a 73.6% clearance rate (seven out of ten properties sold), indicating liquidity.
- Strong second-tier cities: The shift towards consumerization is underway, though the investment aspect is diminishing.
- Third- and fourth-tier cities: These have fully become consumer markets; for instance, second-hand home prices in Huizhou dropped by 9.94% year-on-year, with a high failure rate for auctions (less than two out of ten properties sold).
In short, the lower the urban level, the more houses behave like household appliances—they are purchased for use and become harder to sell when no longer needed.
4. Hidden Changes for Families and Banks
This reclassification will impact both individual financial decisions and banking practices:
- Family assets: The proportion of housing in Chinese households' total assets has decreased from 67% in 2021 to 52% in 2026 (still higher than global averages). Families now need to consider maintenance costs and potential property taxes, and the inability to sell properties is no longer seen as abnormal.
- Bank lending: Banks can no longer rely on future price increases when evaluating mortgage collateral. They must account for depreciation and the risk of unsold properties, leading to more cautious lending practices (as seen in the continuous reduction in mortgage loans by the six major banks).
5. The Real Estate Industry: Shifting from Profit-Making to Product Development and Property Management
The industry's focus has changed:
- Less emphasis on building new houses for profit: With declining new construction, developers must adapt their strategies.
- Emphasis on managing existing properties: Renovations and property services are becoming key areas of investment. For example, rental REITs (real estate investment trusts) have emerged, with a total market value of nearly 20 billion yuan in 2025 and occupancy rates exceeding 95%. The profit comes from rent income, not from price increases—this represents the financialization of housing as a consumer good.
Conclusion
While the policy direction is clear, the future outcome remains uncertain. Questions such as where family assets will be directed (given the lack of alternative investment options) and how land finance systems will adapt remain unresolved. One thing is certain: Housing is no longer a guaranteed profitable investment. When buying a house, people should first consider its usability and then its resale potential.
(The entire analysis is presented in plain language to ensure that non-experts can understand the underlying logic and impacts of the policy.)