Bigger say for local govts in realty policy

China will grant municipal governments greater autonomy to implement city-specific real estate policies, a move aimed at consolidating the property market's recovery trajectory, said the country's top housing regulator.

Minister of Housing and Urban-Rural Development Ni Hong said that future housing supply will be anchored in population trends, which will also determine land sales and guide financial flows.

"The period of rapid, mass rural-to-urban migration is giving way to a phase of stable development. City growth is no longer about expansion but about renovating existing urban facilities and improving efficiency," Ni said in an article in People's Daily on Tuesday.

Localities should craft real estate policies based on a precise calculus of local conditions — regional economic development levels, current housing market conditions and population trends, Ni added.

Ni also noted that China will implement a range of measures to increase the supply of government-subsidized housing.

The annual Central Economic Work Conference, held in Beijing last week, also called for city-specific policies to control new housing supply and clear inventory, and encouraged the acquisition of existing residential properties to use them as government-subsidized housing.

According to the Shanghai-based E-House China R&D Institute, the destocking cycle — the time needed to sell existing new home inventory — for 100 major cities reached 27.4 months in November, nearly double the 14-month threshold widely considered the upper limit of a healthy market.

The destocking cycle diverges sharply by city classification — 17.1 months for first-tier hubs, 22.6 months for second-tier cities, and a staggering 40.3 months for third-and fourth-tier markets, data showed.

"For 2026, supply-side strategies must be further refined, especially in smaller cities," said Chen Wenjing, director of policy research at the China Index Academy. "Localities should decide new housing starts and land supply based on the destocking cycle."

Meanwhile, analysts noted that the acquisition of existing commercial housing stock for conversion into government-subsidized affordable housing will pick up pace next year, which will be a crucial method of clearing housing inventory.

On the one hand, it provides developers with a crucial exit for completed but unsold projects, improving their cash flow and reducing systemic financial risk, said Su Jian, a professor at the School of Economics of Peking University.

On the other, it will meet the housing needs of low-income households, new city residents, and young people, Su added.

While the urbanization rate of the permanent resident population in China reached 67 percent by the end of 2024, the urbanization rate among registered residents remained below 50 percent. The gap could translate into massive demand for government-subsidized affordable housing, Su said.

While digesting existing inventory is critical to keep the property market stable, it's equally important to promote quality house construction to meet people's aspirations for a better living environment.

An official at the Office of the Central Commission for Financial and Economic Affairs said that a considerable portion of urban residents still express insufficient satisfaction with their current housing conditions, giving rise to a demand for upgrades such as "trading old for new" or "trading small for larger" homes.

According to data from the China Index Academy, in the first three quarters of 2025, the proportion of 120-144 square meter units in 30 key cities increased to 30 percent. Large unit types have become the mainstream of the new housing market, with the share of units over 120 square meters rising across cities.

Many cities report an increasing willingness among residents to sell their existing properties to purchase new ones. The proportion of secondhand home transactions has risen from 28 percent in 2021 to 45 percent this year, the official said on Tuesday.

The fact that good houses generally face no difficulty in being sold indicates that the potential for upgrade demand remains significant, the official added.