China's Housing Market Officially Enters 'Stock Era' as Second-Hand Home Sales Surpass New Homes

The Ministry of Housing and Urban-Rural Development (MOHURD) has officially declared that China's real estate market has entered the "stock era," a landmark assessment delivered during a State Council Information Office press conference on the "15th Five-Year Plan" (2026–2030) kickoff series.

Core Evidence: A Historic Reversal in Transaction Structure

The defining metric behind this official designation is a historic shift in transaction composition. The share of second-hand home transactions rose from 27% in 2020 to 46% in 2025, and reached 52% in the first eight months of 2026—surpassing new home sales for the first time.

Key data points include:

• 2020: Second-hand home transactions accounted for 27% of total market transactions
• 2025: Share climbed to 46%
• 2026 (Jan–Aug): Share reached 52%, exceeding new home transactions
• First half of 2026: Nationwide second-hand home online contract area grew 10.2% year-on-year; 18 provinces (autonomous regions and municipalities) saw second-hand residential transaction area exceed that of new homes

This structural shift is underpinned by fundamental changes in housing supply and demand:

• Urbanization rate: 67.89% as of end-2025
• Per capita urban housing floor area: Over 40 square meters
• Total building stock: 602 million buildings nationwide (measured by individual structures, not housing units)
• Housing unit-to-household ratio: Estimated at approximately 1.07 in 2025, indicating "sufficient total supply but structural imbalance"

The core contradiction in the housing market has shifted from "whether there is housing" to "whether housing is good," and from aggregate shortage to structural mismatch.

Fundamental Shift in Development Logic: From Development-Driven to Operations-Driven

The arrival of the stock era represents more than a change in transaction patterns—it signals a systemic reshaping of the industry's underlying logic across three dimensions:

1. Value Center Shifts from Front-End Development to Back-End Operations

In the growth era, core competencies centered on land acquisition, financing, and rapid development and sales. In the stock era, value gravitates toward back-end services: property management, urban renewal, and存量 asset operations. Multiple listed developers have begun divesting heavy-asset development businesses in favor of light-asset operations such as property services, asset management, and urban operations—transitioning from a "quick money" development model to a "long-term money" operations model.

2. Changing Contribution to the Macroeconomy

Real estate's contribution to economic growth will shift from large-scale new construction investment to stock quality improvement and related services. Urban renewal projects—including village-in-city redevelopment, dilapidated housing renovation, and old neighborhood upgrades—will become key drivers of stable investment, while large-scale greenfield development projects will decline.

3. Housing Demand Satisfaction: From New Supply to Stock Revitalization and Quality Enhancement

Future housing demand will be met through three primary channels:

• Stock housing transactions to accommodate relocation and family structure changes
• Renovation and upgrading of existing housing, including old neighborhood improvements and functional enhancements
• Targeted supply of affordable housing, including converting stock commercial housing into subsidized units for new urban residents and young people

Systemic Policy Restructuring: Building a New Institutional Framework for the Stock Era

MOHURD has explicitly called for accelerating the construction of a new real estate development model, marking a systemic transition from growth-era policies to stock-era frameworks.

Key Institutional Reforms

Three foundational systems are being prioritized:

• Project company system: Establishing independent implementation entities for each project
• Lead bank system: Ensuring closed-loop fund management and dedicated use of project funds
• Presale-to-completed sale transition: New projects will prioritize completed-home sales, fundamentally addressing delivery risks and enabling "see-what-you-get" transactions

Urban Renewal as the Main Battleground

The State Council's "Urban Renewal 15th Five-Year Plan" sets targets for 2026–2030:

• Renovate 115,000 old urban residential communities
• Upgrade and install 575,000 residential elevators
• Promote renovation of 1,500 old neighborhoods and factory districts

All cities are required to conduct comprehensive "urban health checks," adhering to the principle of "check before renewal, no renewal without checks."

Stock Revitalization and Affordable Housing Integration

The central government continues to encourage "purchasing stock commercial housing primarily for affordable housing." Local governments are exploring converting stock second-hand homes into subsidized rental housing, creating a closed loop: "purchase stock second-hand homes → convert to subsidized rental housing → targeted destocking of new home inventory." Financial support policies allow loans of up to 30 years for bulk purchases of idle stock housing for long-term rental operations.

Land Supply Logic Transformation

The Ministry of Natural Resources has mandated that urban renewal must break dependence on new construction land and land finance. Annual新增 urban construction land should原则上 not exceed the area of revitalized stock land, fundamentally constraining the old "land acquisition → land sale → development" cycle.

Market Participants: Transition Pressures and Strategic Choices

For Developers

The high-debt, high-leverage, high-turnover model is no longer viable. Developers face dual challenges: persistent liquidity risks and intensifying debt repayment pressures, alongside increasingly apparent ceilings on traditional development business.

The strategic direction is clear: transition from "developer" to "operator" and "service provider," building capabilities around stock asset value discovery,精细 operations, and long-term capital management. Some leading developers have set targets for operations and services revenue to surpass development revenue by 2028.

For Local Governments

The stock era demands a profound transformation of the traditional land finance model. Local land transfer fee revenues as a share of government fund budgets have been declining, with central transfer payments and special bond revenues providing stable supplements. Local governments must cultivate new revenue sources from stock asset operations and urban renewal services, transitioning from "land-sale finance" to "operations finance."

A Balanced Perspective: Challenges and Opportunities Coexist

The transition to the stock era will not happen overnight. Current challenges include:

• Persistent liquidity pressures on developers
• Extended destocking cycles for stock commercial housing in some cities
• Underdeveloped stock asset operations and management capabilities
• Need for further refinement of supporting institutional frameworks

However, the "stock era" should not be equated with "market contraction." International experience shows that total housing transaction volumes do not decline significantly; only the transaction structure changes. China's ongoing urbanization, vast potential for urban stock optimization, and strong public demand for quality housing all point to continued potential for high-quality real estate development.

From a macro perspective, the real estate sector's entry into the stock era reflects China's broader economic transition from high-speed growth to high-quality development. An era defined by scale expansion is giving way to one characterized by quality improvement, service optimization, and operational precision.

Market participants must proactively adapt and transform; policymakers must continue refining and precisely targeting interventions. This collective effort will drive the real estate industry toward a new cycle of精细化, high-quality, and sustainable development, ultimately contributing to improved living environments and high-quality urban development.

Disclaimer: Market risks exist; invest with caution. The information herein represents views only and does not constitute investment advice. Research data supported by Tonghuashun iFinD.

Original article by Fu Yifu, Senior Researcher at Star Atlas Institute of Finance, published on the "Star Atlas Institute of Finance" WeChat public account. Editor: Hu Wei.

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