Global Macro Chart of the Day (#109): China shifts away from pre-sale housing model

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Global Macro Chart of the Day (#109): China shifts away from pre-sale housing model

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Global Macro Chart of the Day Economics

Global(#109): China shifts away from pre-sale housing

model Arend Kapteyn

Economist

arend.kapteyn@ubs.com

+44-20-7567 0531

The 22nd edition of our China Housing Survey is out

We published the 22nd edition of our China Housing Survey (April 8–May 4). The results

point to a modest improvement in demand, but the recovery is highly uneven across city

tiers. Tier-1 cities show a clear rebound, with 43% of respondents planning to buy in the

next 1–2 years (+21pp since the last survey). Tier-2 cities improved more modestly

(+10pp), while Tier-3 cities—representing the bulk of the market—continued to

deteriorate (-3pp). Encouragingly, price expectations are stabilizing: 51% of

respondents now expect prices to be stable (up from 39%), exceeding the 35% who still

anticipate declines.

One of the most striking charts I think is that the share of pre-sales in total residential

transactions has fallen from above 90% in 2020 to 67% by end-2025. The pre-sale

model was central to China’s housing boom: households bought apartments years

before completion, effectively providing developers with 50–70% of their operating

cash. This enabled a highly leveraged, self-reinforcing growth model. When demand

softened after 2020, the system unraveled—pre-sale inflows dried up, liquidity

tightened, and developers struggled to complete projects or service debt. Defaults and

unfinished homes then eroded buyer confidence, amplifying the downturn.Since late

2024, policymakers have encouraged the transition from pre-sales to the sale of

completed homes, aiming to reduce project delivery risks and improve housing quality