(Yicai) March 6 -- China’s 2026 government work report delivered at the National People’s Congress has set a clear policy tone for the real estate sector, outlining a coherent roadmap that spans stabilizing the market, reducing inventory, optimizing supply, preventing risks, and building a new development model for the industry.

Achieving a steady recovery in the property market will lay a solid foundation for the real estate sector, its industrial chains, and, in turn, the sound development of the macroeconomy. The report’s proposal of “controlling new housing supply, reducing inventory, and optimizing supply through city-specific policies” serves as the core approach to stabilizing the property market.

The measures mentioned -- “optimizing the supply of government-subsidized housing and accelerating the renovation of dilapidated and old homes” -- signal a shift in the supply logic of affordable housing. In the past, subsidized housing mainly came from new construction, often located in remote areas with inadequate supporting facilities, resulting in weak demand. Under the new policy framework, sources of subsidized housing will become more diversified, such as through the acquisition and storage of existing commercial housing.

The policy orientation of “encouraging the purchase of existing commercial housing for use as subsidized housing” indicates that pilot housing acquisition programs in some cities have achieved notable results in reducing local inventories. This is expected to guide more cities to launch similar initiatives to absorb existing housing stock.

The report urged continuing to “leverage the whitelist mechanism for ensuring housing delivery to prevent debt default risks,” stressing the need to reasonably separate project risks from those of real estate enterprises. Banks will provide financing to projects that are financially sound and have market demand to ensure homes are delivered to buyers.

In addition, the report called for deepening reforms of the housing provident fund system to unlock the liquidity of such funds. As provident fund loan rates are lower than commercial mortgage rates, raising loan limits can reduce the overall housing costs for residents.

The mention of “orderly promoting the construction of safe, comfortable, green, and smart ‘high-quality homes’ and launching projects to improve housing quality and property service standards” reflects that China’s real estate sector is entering a “quality era.” Developers need to focus on building high-quality properties that meet consumers’ new demands.

The report also stressed the need to “further advance the development of basic systems and supporting policies for the new model of real estate development,” signaling that the industry’s traditional “high leverage, high debt, and high turnover” model has run its course. A new set of basic systems tailored to current market conditions will be established, covering areas such as land, finance, and taxation.

The government work report signals that in 2026, China will continue to pursue inventory reduction, housing delivery guarantees, and risk prevention through housing provident fund reforms and optimized subsidized housing supply to stabilize the market as soon as possible.

Meanwhile, efforts will be made to lay the groundwork for the sector’s medium- to long-term development by setting standards for high-quality homes and building a new industry development model.

Combined with recent signs of market recovery in first-tier cities, China’s property market is expected to perform better this year than in 2025.

(Lu Wenxi is chief analyst at Centaline Property Shanghai.)

Editors: Tang Shihua, Emmi Laine