Mainland China and Hong Kong property markets Report Interpretation

Overview

This weekly monitor reviews Mainland China and Hong Kong residential-market activity, listed-property performance, and selected China property credit. J.P. Morgan sees early improvement in selected China transaction and confidence indicators but continued price pressure, while Hong Kong launch outcomes remain divergent and heavily dependent on pricing.

Core views

Mainland China’s first land sale under the new “828” policy framework requiring sales only after homes are completed is being tested in Qingtian County, Lishui, Zhejiang. Two parcels are scheduled for auction on 23 September. J.P. Morgan notes that this is not a pure commercial-housing transaction: E-House estimates that about 60% of units will be repurchased by the government as resettlement housing, locking in more than half of demand from the outset and reducing developer risk. With a relatively small total land consideration of about RMB0.5bn, the institution views the transaction as a measured test by the local government. Developers are still awaiting bank and local-government guidance on execution details, including mortgage disbursement and possible mitigants or exemptions. China housing activity showed incremental improvement. Real-time secondary sales across nine cities rose 8% year on year, versus 7% previously; tier-1 city sales rose 5%, versus 9% previously, with Beijing and Shanghai each up 9%. J.P. Morgan notes that these real-time figures lead official registrations by several weeks. Official 19-city primary registrations rose 2% after a prior 3% decline, led by tier-1 cities at 7% year on year. Twelve-city secondary registrations rose 3%, moderating from 4% previously. Supporting indicators were mixed: the tier-1 visitation index edged up from 21.5 to 21.8, within the report’s 20–40 recovery range; the manager confidence index rose from 50 to 53, including Shanghai from 51 to 53 and Guangzhou from 43 to 47. However, pricing remains soft, as the Centaline tier-1 listing-price index fell from 13.7 to 13.5, a historical low, while the Iceberg listing-price index declined 0.1% week on week. Secondary listings across ten cities increased 0.3% week on week, though listings have fallen about 6% from the March peak, which J.P. Morgan associates with home-price stabilization. In Hong Kong’s primary market, sell-through was markedly divergent. CR Land’s Sterling project in West Kowloon sold 100% of its 133-unit second batch at HK$19.2K per sq ft, priced 2% above the first batch but 24% below the secondary market. A subsequent fourth price list was HK$19.7K per sq ft, 2% above the second batch and 22% below secondary prices. By contrast, Sino-led La Mirabelle II in Lohas sold 24% of a 148-unit batch priced at HK$17.8K per sq ft, 9% above its last price list and 3% above secondary prices. The contrasting results point to launch-price competitiveness as a key driver of absorption. Hong Kong secondary activity was softer: transactions across the top 35 estates totaled 49 units, down 8% week on week and 27% year on year, although weekend appointments in the top 15 estates increased 3% week on week and 4% year on year. The home-price index fell 0.4% week on week after two consecutive weekly gains. Prices were nevertheless up 12% year to date, already within J.P. Morgan’s 10–15% full-year target range, and the institution expects them to remain range-bound in 2H26. The Centaline Valuation Index rose from 73.3 to 79.7. Tourist arrivals increased 3% year on year but declined 20% week on week. Property equities sold off during the week. Mainland China property shares fell 14%, compared with a 1% decline in the HSI, following the latest policy discussion around phasing out the pre-sale system. CG Services gained 1%, while Greentown fell 26%, C&D International 24%, and Yuexiu and Jinmao each 20%. Hong Kong property and conglomerate shares fell 4%, also lagging the HSI’s 1% decline amid rate-hike concerns; Swire Pacific rose 1%, while Henderson, New World Development, Sun Hung Kai Properties and Wharf Holdings declined 11%, 9%, 8% and 7%, respectively. On credit, the JACI China HY Property index fell 0.09% for the week versus a flat broader China HY index, reducing its year-to-date return to 10.8%. J.P. Morgan remains Overweight on Longfor bonds, citing RMB25bn of cash, positive free cash flow and expected ability to service RMB6bn–7bn of annual maturities in 2027–28 despite a 95% year-on-year decline in 1H26 core net profit to RMB64mn and an expected full-year loss. It expects positive-profit recovery in 2027 as development-property drag eases. The institution remains Neutral on Seazen’s FUTLAN ’28s, Jinmao’s CHJMAO ’29s and Greentown’s GRNCH ’28s, judging valuation upside limited or fair despite varying credit strengths. Vanke’s 2Q26 net loss widened to RMB8.5bn from RMB5.3bn in 1Q26 and cash fell 14% half on half to RMB53bn; J.P. Morgan expects it to manage RMB3.4bn of remaining 2026 bond maturities through a 40% upfront repayment and a one-year extension for the balance.

Analysis framework

The report combines weekly transaction registrations, real-time sales, listing and viewing indicators, developer launch data, home-price and sentiment indices, share-price moves, southbound holdings, valuation summaries and bond pricing. It compares sequential and year-on-year changes to assess housing demand, pricing and liquidity, then links those conditions to selected equity and credit views.

Methodology notes

• Industry AnalysisSupply-demand framework

  Weekly housing supply-demand monitoring through sales, listings, viewings, launch pricing and sell-through rates.

  The report uses changes in transactions, inventory, visitation and project absorption to assess whether property demand is recovering and whether prices can stabilize.

• Industry AnalysisVolume-price decomposition

  Comparison of transaction volumes, asking-price indices and launch discounts.

  J.P. Morgan separates sales-volume recovery from still-weak price indicators, and uses discounted primary-market pricing to explain differing Hong Kong sell-through.

• Fixed Income and CreditSpread and Asset-Quality Analysis

  Bond recommendations based on issuer liquidity, cash flow, debt maturities, profitability and bond yields or spreads.

  For selected developers, the report evaluates debt-service capacity alongside bond valuation to support Overweight or Neutral credit views.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China Resources Mixc (1209.HK)

  J.P. Morgan equity top pick in Mainland China property.

  Strengths

  Included among J.P. Morgan’s top picks.

• China Resources Land (1109.HK)

  J.P. Morgan equity top pick in Mainland China property.

  Strengths

  Included among J.P. Morgan’s top picks; the valuation summary lists an Overweight rating.

• Longfor bonds

  J.P. Morgan is Overweight on the Longfor curve.

  Strengths

  RMB25bn cash balance, positive free cash flow, and expected capacity to manage 2027–28 maturities.

  Weaknesses

  1H26 core net profit fell 95% year on year to RMB64mn and the report expects a full-year loss.

  Comparison

  Preferred to several Neutral-rated developer bonds.

  Risks

  Recovery depends on development-property drag easing and the expected 2027 profit turnaround.

• Swire Properties (1972.HK), Wharf REIC (1997.HK), Link REIT (0823.HK), Hongkong Land (HKLD.SI)

  J.P. Morgan Hong Kong equity top picks.

  Strengths

  Explicitly named as top picks.

Key data

• China 9-city real-time secondary sales+8% Y/YPrior reading was +7%; Beijing and Shanghai were both +9% Y/Y.
• China 19-city primary sales registrations+2% Y/YImproved from -3% previously; tier-1 cities were +7% Y/Y.
• China tier-1 visitation index21.8Up from 21.5; the report defines 20–40 as a recovering market.
• Hong Kong Sterling second-batch sell-through100%133 units sold at HK$19.2K per sq ft, 24% below secondary-market pricing.
• Hong Kong La Mirabelle II sell-through24%148-unit batch priced at HK$17.8K per sq ft.
• Hong Kong home-price performance+12% YTDThe index fell 0.4% week on week and had reached J.P. Morgan’s 10–15% full-year target range.
• JACI China HY Property index-0.09% W/W; +10.8% YTDThe broader China HY index was flat for the week.
• Longfor 1H26 core net profitRMB64mnDown 95% year on year; J.P. Morgan expects a return to positive profits in 2027E.

Impact & implications

The report portrays the China market as showing tentative demand and sentiment recovery rather than a broad pricing recovery, with the completed-home-sales policy test designed to reduce development risk through pre-arranged demand. In Hong Kong, discounted new-launch pricing appears crucial to absorption, while the institution expects home prices to consolidate in 2H26. Credit conclusions remain issuer-specific, with Longfor preferred over selected peers on liquidity and expected recovery.

Risks

• Developers remain awaiting guidance on mortgage disbursement and potential mitigants or exemptions for the completed-home-sales policy.
• Hong Kong property shares fell amid rate-hike concerns.
• Longfor’s expected profit recovery depends on development-property drag easing.

What to watch

• The 23 September auction of the two Qingtian completed-home-sales land parcels and details of their execution.
• Further bank and local-government guidance on mortgage disbursement and policy exemptions.
• Whether Mainland China sales improvement is sustained and translates into firmer listing-price indicators.
• Hong Kong primary-project absorption and the degree of launch discounting versus secondary-market prices.
• Whether Hong Kong home prices remain range-bound in 2H26 as J.P. Morgan expects.