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

At the annual National People’s Congress meetings, the real estate market always attracts 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 houses” 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. This mechanism adjusts land supply and new construction scale based on population movement and inventory cycles, achieving “land follows people, housing is built as needed.”

Achieving a strong foundation through quality supply requires starting from “land” and “housing,” which is also key to deepening the development of new real estate models through foundational systems and supporting policies.

This year, the government work report proposes to “control new additions through city-specific policies, reduce inventory, optimize supply, explore multiple channels to activate existing stock of commercial housing, and encourage the purchase of existing properties mainly for affordable housing.” It also emphasizes “high-quality urban renewal, steadily implementing renovations of old urban neighborhoods and villages, revitalizing idle land and housing facilities,” and “promoting the construction of safe, comfortable, green, and smart ‘good houses,’ implementing quality improvement projects and property service upgrades.”

To realize the goal of “quality supply,” multiple measures are needed. First, revitalizing existing housing—future acquisitions of existing commercial properties are expected to be mainly led by local governments, and besides purchasing new commercial housing, buying second-hand homes will also be an important measure for inventory reduction and revitalization. In early February, Shanghai’s three districts piloted purchasing second-hand homes for affordable rental housing, positively impacting market expectations, with more cities expected to follow. Second, building “good houses” has become key for real estate companies to improve quality and win the market. By 2025, core areas in many cities’ “daylight” projects not only had advantages in floor area ratio but also generally featured safety, comfort, green, and smart characteristics, and incorporated 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 issuance has expanded to include urban renewal facilities, enabling the reallocation of space functions and economic value for urban villages, old neighborhoods, existing commercial properties, idle land, and inefficient commercial real estate through renewal mechanisms.

Demand stimulation is also crucial for boosting 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 new parents, and supporting multi-child families’ housing needs. It also mentions deepening the reform of the housing provident fund system, indicating a more targeted approach to releasing housing demand, aiming to integrate real estate policies with population policies to effectively benefit people’s livelihoods and stabilize the market.

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 revitalizing existing stock to meet the housing needs of newlyweds.

Continuing to promote “guaranteed delivery of homes” is essential to resolve risks. After ongoing efforts to ensure project delivery and address developer debt risks, the risk level has eased, but risk prevention must remain a priority.

This year, the government work report proposes further leveraging the “white list” system for guaranteed delivery, to prevent debt default risks. 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 completion, 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, indicating positive changes. In the future, as the real estate industry gradually emerges from the adjustment period, a new development pattern focused on quality supply and more stable operation will take shape.