Housing "trade-in," regarded as an effective means to promote the linkage between new and second-hand homes and enhance the liquidity of the real estate market, has been predicted by some institutions as a "key step" toward opening a new trillion-yuan market. Recently, the roster of cities adopting "trade-in" has continued to expand. According to monitoring by the China Index Academy, as of June 25, 2024, more than 85 cities nationwide have rolled out housing "trade-in" measures. With many places carrying out housing "trade-in," how exactly does the "trade-in" work? How effective is the policy implementation? And what difficulties remain in the specific rollout process?

Judging from the "trade-in" models launched across various localities, they can be roughly divided into three types: state-owned enterprise acquisition, agency-assisted sales, and home-purchase subsidies.

Among them, "state-owned enterprise acquisition" mainly refers to developers or state-owned capital platforms purchasing old homes, with the sale proceeds used to buy designated new housing projects; representative cities include Zhengzhou and Nanjing. "Agency-assisted sales" refers to real estate enterprises joining forces with brokerage agencies to prioritize the sale of old homes—if the old home is sold within a certain period, the buyer then purchases a new home according to the procedure; representative cities include Shenzhen and Shaoxing. "Home-purchase subsidies" refers to providing home-purchase subsidies or deed tax subsidies to individuals or families who sell their own homes and buy newly built commercial housing, as in Shenyang, Xuzhou, and Yangzhou.

The "trade-in" models launched in first-tier cities are mainly concentrated in "agency-assisted sales." For example, Beijing recently proposed organizing housing "trade-in" activities. The Beijing Real Estate Association and the Beijing Real Estate Brokerage Industry Association will build a matching platform, encouraging more development enterprises and brokerage agencies to participate and jointly provide better services for residents participating in "trade-in." For households selling an old home to buy a new one, real estate brokerage agencies will prioritize facilitating the old-home transaction; after the old home is successfully sold, the relevant deposit will be converted into the down payment for purchasing the new home; if the old home is not successfully sold within a certain period, the development enterprise will unconditionally refund the deposit.

In April 2024, the Shanghai Real Estate Industry Association and the Shanghai Real Estate Brokerage Industry Association jointly proposed launching a commercial housing "trade-in" campaign across Shanghai. The first batch of participating real estate development enterprises numbered more than 20, and real estate brokerage agencies nearly 10. The first batch of participating projects numbered more than 30, mainly distributed in Jiading, Songjiang, Qingpu, Fengxian, Lingang, and other areas.

"Both selling the old home and buying the new one require agencies to bridge and match; brokerage agencies are the key players in 'agency-assisted sales,'" said Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Institute of Urban and Rural Planning. Getting sellers to accept lower listing and transaction prices, getting developers to accept larger discounts on new homes, and implementing "no-liability deposit refunds" all depend on brokerage agencies to connect the parties. Given that both buyers and sellers are relatively sensitive to price and cost, brokerage agencies should reduce commission rates so that both sides can see tangible benefits—benefits that are stacked from taxation, finance, new-home discounts, and other aspects.

Chen Wenjing, market research director at the China Index Academy, stated that the effect of the "agency-assisted sales" model largely depends on market conditions; in the current "buyer's market," the second-hand home sale segment of this model carries considerable uncertainty, and overall results are currently rather limited. By contrast, the "state-owned enterprise acquisition" model has already achieved certain results in some cities.

The "state-owned enterprise acquisition for trade-in" model involves state-owned capital platforms directly purchasing homeowners' second-hand homes, after which the homeowners buy new homes. According to monitoring by the China Index Academy, since the second half of last year, Suzhou, Qidong in Nantong, Xuancheng, Wuxi, Huangshi, Nanjing, and other cities have rolled out "state-owned enterprise acquisition for trade-in" policies, with Jiangsu cities particularly prominent. In the "trade-in" stage, policies vary somewhat across localities.

Specifically, one approach gives trade-in participants a relatively broad range of choices, allowing them to purchase any new housing project of development enterprises included in the housing pool. According to China Index monitoring, Zhengzhou's current "acquisition for trade-in" model imposes relatively few constraints on the "trade-in" scope. Under Zhengzhou's "acquisition for trade-in," state-owned capital platforms directly purchase homeowners' old homes; as of June 24, the Zhengzhou real estate transaction service platform showed that trade-in participants could choose from a total of 189 new housing projects. On one hand, a broader range of choices can boost residents' enthusiasm for trade-in; on the other hand, it helps improve sales for development enterprises included in the housing pool—but this places higher demands on the state-owned capital platforms' capital reserves and financing capacity.

The other approach has state-owned enterprises limit trade-in participants to purchasing only designated new housing projects under the enterprise (achieving targeted destocking); most cities currently adopt this method. Among the cities that have issued relevant policies, Nanjing is highly representative; its "trade-in" has gone through two stages. The first stage launched in April 2024, with new housing limited to projects under Nanjing Anju Group; the second stage launched in June, significantly expanding the number of new housing units available.

At present, "trade-in" measures in some cities have already produced certain results. Nanjing Anju Group released its "report card" on June 27—the 14 participating project sales offices received a cumulative 3,000 groups of visitors, and about 690 trade-in participants paid intent deposits for new homes; appraisal work was completed for more than 600 housing units, and 208 existing homes have signed four-party agreements.

In addition to the above two models, many cities have also introduced home-purchase subsidy policies, providing certain home-purchase subsidies to individuals or families who sell their own homes and buy newly built commercial housing.

Wang Xiaoqiang, chief analyst at the Zhuge Data Research Center, pointed out that the "trade-in" policy aligns well with current market trends, mainly supporting homebuyers on the demand side. At present, the number of second-hand home listings is at a relatively high level, and trade-up buyers often need to sell their currently held homes to have enough funds to buy new ones; under high inventory pressure, the housing transaction cycle is relatively long. The new policy facilitates trade-up buyers participating in "trade-in," strengthens the linkage between the new and second-hand housing markets, and helps improve transaction efficiency and market activity in the industry.

Wang Xiaoqiang also emphasized that the "trade-in" policy has certain market potential, but issues such as market demand, old-home valuation, and acquisition funding still require great attention. Only when key factors on all sides form a virtuous interaction can "trade-in" deliver its maximum effectiveness.