Optimize Supply, Stabilize Expectations, Draw a New Picture of Real Estate Development

At the annual National People’s Congress, the real estate market is always a focus of attention. The 2026 government work report’s statement to “focus on stabilizing the real estate market” shows greater resolve and confidence compared to the 2025 goal of “continuously pushing for the market to stop falling and stabilize.”

The planning and deployment of real estate work in the government work report centers on stability as the main theme, with “city-specific policies” as the means. In the short term, the bottom line is “risk prevention,” using financial tools to “stabilize the housing market” and meet diverse housing needs; in the long term, it involves optimizing supply and building “good homes” to create new development models and guide the industry toward sustainable growth.

Implementing a “new development model” for the real estate industry mainly involves establishing a “people, housing, land, and money” linkage mechanism. By regulating land supply and new construction based on population movement and inventory cycles, the goal is to realize “land follows people, housing is built as needed.”

Achieving a strong foundation through quality supply starts with “land” and “housing,” which are also key to advancing the new development model through foundational systems and supporting policies.

This year, the government work report states, “Implement city-specific policies to control new additions, reduce inventory, and optimize supply; explore multiple channels to activate existing commercial housing stock; encourage acquisition of existing properties mainly for affordable housing,” and “advance high-quality urban renewal steadily, including renovation of old urban neighborhoods and villages within the city. Activate and utilize existing land and idle housing facilities,” as well as “promote the orderly construction of safe, comfortable, green, and smart ‘good homes,’ implement quality improvement projects for housing, and enhance property management services.”

To achieve the “quality supply” goal, multiple measures are needed. First, revitalizing existing housing, with future acquisitions of stock properties likely led by local governments. Besides purchasing new homes, acquiring second-hand properties will also be an important measure for inventory reduction and revitalization. In early February, Shanghai’s three districts piloted the purchase of second-hand homes for affordable rental housing, positively impacting market expectations, with more cities expected to follow. Second, building “good homes” has become key for real estate companies to improve quality and win the market. By 2025, core areas in many cities’ “daylight” projects will generally feature safety, comfort, green, and smart characteristics, along with third-party services like elderly care, childcare, and housekeeping, gradually forming a “hardware + services” mixed residential model—an important foundation for the new development model. Third, high-quality urban renewal is moving from pilot exploration to a systematic phase, with cities accelerating their renewal efforts. The scope of infrastructure REITs has expanded to include urban renewal facilities, enabling the reallocation of space and economic value for old neighborhoods, stock properties, idle land, and inefficient commercial real estate through renewal mechanisms.

Demand stimulation enhances vitality. Currently, local governments are implementing city-specific policies to lower home purchase barriers, reduce costs, and increase willingness and ability to buy, which has already shown results. Building on this, the government work report for the first time emphasizes strengthening housing security for newly married and newly parented families and supporting multi-child families’ housing needs. It also mentions deepening the reform of the housing provident fund system, indicating a more targeted release of housing demand through close coordination of real estate and population policies, integrating “benefiting people’s livelihoods” with “market stabilization.”

In the near future, more detailed policies are expected in areas like financial support, purchase subsidies, and housing provident funds. Additionally, previous policies have favored multi-child families, and future efforts may include housing credit, direct fiscal subsidies, and activating stock properties to meet the housing needs of newlyweds.

Continuing to promote “guaranteed delivery” to resolve risks. After ongoing efforts to ensure project delivery and address developer debt risks, the real estate risk has eased, but risk prevention awareness must remain high.

This year, the government work report proposes further leveraging the “white list” system for guaranteed delivery to prevent debt defaults. This indicates that the “white list” system has achieved significant results in practice and greatly accelerates the cleanup of industry risks. Moving forward, the “white list” will continue to be a core tool for targeted relief, promoting qualified project financing, ensuring project delivery, safeguarding people’s livelihoods, and guiding developers toward compliant financing and refined operations.

Building a new development model for real estate is a systematic project that cannot be achieved overnight. It requires coordinated efforts from all parties, properly allocating the elements of “people, housing, land, and money,” and orderly advancing the establishment of foundational systems. Recent market trends show regional markets have stabilized, with January seeing a narrowing of month-on-month declines in first-, second-, and third-tier cities’ home prices, indicating positive changes. In the future, as the real estate industry gradually emerges from the adjustment period, a new development pattern centered on quality supply and more stable operation will take shape.