Pacific Securities Real Estate Special: State Purchases of Existing Homes Accelerate in Tier-1 Cities
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Pacific Securities argues China's state purchase of existing homes for destocking has reached a critical stage with strengthening policy support, serving both inventory digestion and affordable housing supply. The 2026 Government Work Report for the first time encouraged acquiring existing commodity homes mainly for affordable housing; by mid-February 2026, 36 key cities had issued explicit purchase announcements and over 80 cities backed district-level SOE purchases. In Shanghai, a China Construction Bank Shanghai-led first batch of secondhand-home purchases for affordable rental housing was signed on February 2, 2026, piloted in Pudong, Jing'an and Xuhui and extended in May to five more districts; by July 25 the three pilots had acquired 551 secondhand homes, with 16 households completing upgrades into new homes. Guangzhou launched a RMB 200 million 'sell-old-buy-new' subsidy on April 30 — 120 owners received RMB 2.6788 million pre-tax, spurring RMB 850 million of transactions — while Nansha plans RMB 290 million for 20,000 sqm of resettlement housing. Nationally, special bonds above RMB 6 billion had funded roughly 13,000 purchases by end-March 2026, and the AVIC Beijing Changping rental-housing REIT raised RMB 926.8 million. Uses now span affordable rental, resettlement and student dormitories. Constraints include supply-demand mismatch and funding costs; the report suggests watching related local SOEs and developers. Risks: policy execution, demand recovery and sector downturn.