Presale housing system stands at a crossroad

It's true that the completion of some housing projects has been delayed, but work on most of the projects is progressing smoothly and housing units will be handed over to the homebuyers on time, said Fu Linghui, spokesman for the National Bureau of Statistics and director of the bureau's Department of Comprehensive Statistics, during a news conference this week.

Fu's remarks came after some homebuyers complained of facing problems in getting possession of some presale homes. This means developers are allowed to sell housing units before construction is completed and collect presale funds from homebuyers to finance their projects.

The prevalence of the presale housing system in China is arguably the result of the government's policy to accelerate housing supply to meet people's growing needs. Presale funds, in effect, are interest-free loans to developers, which greatly reduce their capital investment requirement for launching a project. Also, the lower initial capital requirement can help developers to drastically increase their housing supply capacity.