Quality homes should anchor China’s property transition toward better standards, stronger renewal and more sustainable growth

The call for “quality homes” in this year’s Government Work Report represents an important policy shift. But without institutional changes, the concept risks remaining a policy slogan or, worse, being absorbed into the marketing language of high-end projects.

At present, the gap is clear: While demand has upgraded toward housing that is safe, comfortable, green and smart, the supply system remains largely anchored in the old model of scale expansion and rapid turnover, including land allocation, development incentives and financing structures. As a result, the policy emphasis on “quality” risks being diluted by mechanisms still rewarding quantity.

The first priority, therefore, is to embed quality into the rules of supply, rather than leaving it to voluntary developer behavior. Land transactions should move beyond price competition and incorporate binding quality indicators, including design standards, environmental performance and livability metrics. Planning and approval processes should shift their focus accordingly, from floor area and density to aspects such as layout efficiency, sound insulation, ventilation and age-friendly design.

More importantly, regulatory oversight should extend to the delivery stage, ensuring that quality commitments made at the planning phase are enforceable and verifiable. Without such institutionalization, the “quality homes” policy cannot form a stable expectation in the market. A useful international reference is Singapore, where sustainability and quality benchmarks are integrated into land supply and development requirements from the outset. The key lesson is not replication, but sequencing: Quality must be defined ex ante in the system, not added ex post in sales narratives.

The second priority is to avoid narrowing “quality homes” to only new, premium housing supply. Such an interpretation would significantly limit its policy relevance. In China’s current stage of urbanization, the marginal improvement in living standards increasingly comes from upgrading existing neighborhoods rather than building entirely new ones. This implies a necessary shift from a “new construction-centered” approach to a “stock optimization-centered” model. Urban renewal, renovation of aging residential compounds, redevelopment of urban villages and age-friendly retrofitting should become the main carriers of “quality improvement”. In this context, housing quality is inseparable from community quality. The experience of Chongqing’s Taping renewal project illustrates this direction. Covering 44 residential buildings and benefiting 1,487 households, the project took some of the residents’ most pressing concerns as its main targets, including undergrounding overhead utility lines, removing safety hazards and separating rainwater from sewage, while also advancing housing renovation, the construction of small public activity squares and the provision of a community canteen. This case shows how broad policy goals can be translated into concrete, resident-oriented interventions at the neighborhood level. This highlights a critical point: Quality housing is increasingly delivered through systemic neighborhood improvement, not isolated building upgrades.

The third priority is to realign financial structures with the new development logic. The traditional financing model, which is heavily reliant on pre-sales and rapid capital turnover, was built for an era of high-speed expansion, but it is poorly suited to a system now centered on delivery assurance, long-term operation and gradual renewal. What is needed is not simply more financing, but a fundamentally different kind of financing, one that prioritizes stability over liquidity and long-term value over short-term returns. Both medium- and long-term capital should be systematically directed toward project completion, urban renewal, energy-efficiency upgrades and community infrastructure. Achieving this requires financial instruments such as infrastructure investment funds, green bonds and long-term leasing vehicles, as well as regulatory frameworks that incentivize patient capital and support longer investment horizons with more stable, predictable returns.

Recent policy signals are moving in this direction. The further use of the “white list” mechanism and guidance from the National Administration of Financial Regulation suggest an effort to improve financing support for viable projects under the new model. Meanwhile, practices in Guangzhou demonstrate a shift from “sales-driven finance” to “delivery- and renewal-oriented finance”. Fifty-two approved special-loan projects for urban village redevelopment have already entered the stage of substantive construction, with total credit reaching 409.6 billion yuan ($59.3 billion). The funds have been directed toward early-stage project work, compensation and resettlement, the construction of resettlement housing and supporting infrastructure for resettlement communities. What matters here is not simply the scale of funding, but the fact that financing is being channeled toward delivery, resettlement and supporting facilities rather than short-term sales expansion. This transition is essential if quality improvement is to be sustained rather than episodic.

Ultimately, the significance of the “quality homes” policy lies in whether it can serve as a structural anchor for the real estate sector’s transition and whether it can connect micro-level well-being with macro-level objectives such as urban renewal, new-type urbanization and high-quality development. This connection will not materialize automatically. It depends on whether the concept is translated into binding supply rules, a rebalanced focus on stock renewal and a compatible financial system. If these three dimensions advance together, “quality homes” can move beyond rhetoric and become the foundation of a more resilient and sustainable real estate model. Otherwise, it risks becoming just another policy phrase in a sector still searching for its next equilibrium.

Lu Jiajun is a researcher at the Academy of Financial Research at Zhejiang University and an assistant professor at Zhejiang University International Business School. Wang Shangyu is a research assistant at Zhejiang University International Business School.

The authors contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.