The push toward selling completed residential properties is becoming the industry standard, prompting questions about how property developers will alter their land acquisition strategies. A senior official from the Ministry of Housing and Urban-Rural Development recently stated that the country will prioritize the implementation of a project company system, a lead bank system, and a completed-property sales system to reform the foundational mechanisms of the real estate sector.

The official emphasized that pre-sales are no longer the primary future model for the industry. This statement has fueled widespread discussion about the transition to selling finished homes, especially following the late August release of a comprehensive policy package that also aims to raise the bar for accessing the pre-sale system. Local governments are now expected to issue their own detailed rules to implement these changes.

Early signs of this shift are emerging in the land market, with some newly listed parcels explicitly designated for completed-property sales and a noticeable decline in land premium rates. The government is pushing forward with a new development model that involves establishing a separate project company for each real estate development, designating a lead bank to manage all project funds and financing, and requiring new projects that are sold to be fully constructed and ready for occupancy to essentially eliminate delivery risks.

Industry analysts suggest that the previous pre-sale system contributed to market homogeneity and low-level competition among developers. A move to post-completion sales will raise the industry's bar, potentially phasing out developers who cannot meet higher consumer demands for quality and certainty. Developers will likely focus more on product design and matching supply with actual demand, which could help alleviate current market stability pressures caused by high inventory and inefficient supply.

Since the new policy announcement on August 28, a few cities have already started to list land parcels that require completed-property sales. For example, two residential and commercial plots in Lishui were offered for sale with an explicit requirement that all marketable housing be sold on a completed basis. Similarly, Xiamen has designated one plot within the island for completed sales, while another outside the island is still eligible for pre-sales but must meet specific construction progress milestones, such as completing the main structure. Another city, Quanzhou, attempted to list a plot under the new three system rules but had to withdraw the auction due to a property rights dispute.

Despite these specific examples, most other cities have not yet made the completed-sales requirement a standard condition in their general land listings. Instead, they are placing stricter demands on the financial capacity of developers participating in land auctions, such as prohibiting the use of external financing or related-party loans for land purchase funds. This suggests that most local governments are taking a gradual and measured approach, allowing for a more orderly transition rather than a sudden, sweeping change that could impact the market too quickly.

Data from the China Index Academy indicates that the impact on the broader land market is still in its early stages. Since the policy announcement, the average premium rate on residential land transactions has cooled compared to the weekly average seen earlier this year. While high-quality parcels in core cities still attract developer interest, most plots outside of key urban areas or with weaker sales projections are being won at minimum bid prices. The newly introduced requirements, including sale methods and land payment schedules, are already influencing how developers calculate their investment risks and formulate bids.

The most significant effect of a comprehensive move to completed-property sales would be on developers' financial operations. Management at China Resources Land has stated that the new policies represent a major step toward establishing a healthy development model for the property market. They believe it will help repair the supply-demand balance and price expectations for new homes, protect homebuyers' rights, and help companies shift away from a reliance on high debt, high leverage, and high turnover. While this transition will create short-term cash flow pressure, it is expected to foster a long-term, high-quality development state.

The shift will fundamentally alter the cash flow dynamics of property development. As developers can no longer rely on early pre-sale revenue to fund construction, they will need to cover all land and construction costs upfront until a project is completed. This extends the capital occupation cycle significantly, forcing companies to adjust their financial cost models. Research suggests the additional financial costs of a completed-property model could amount to roughly 11% of the total land price due to increased interest and management fees accrued over a longer period.

This new environment will compel developers to change how they invest and bid for land in four key ways. First, they will likely concentrate their investments even more heavily in core areas of top-tier and strong second-tier cities. Second, their preference will shift toward low-density residential plots where construction timelines are shorter and more manageable. Third, the higher capital thresholds will normalize joint ventures and consortium bids, reducing the risk for any single company. Fourth, the era of bidding up inflated land prices is likely to come to an end, with a more stable land price environment becoming the long-term norm.

Analysts from Eastern Goldwin Securities note that selling completed homes will help rebuild buyer confidence, and with support from both supply and demand sides, this will contribute to achieving the overarching goals of stabilizing land prices, home prices, and market expectations. In the long run, this supply-side reform, focused on tightening fund supervision and isolating project risks, will solidify the safety net against delivery defaults. As the property market returns to its primary role of providing shelter, the core competition will transition from rapid expansion to a comprehensive contest of product quality and service.