Chinese Developers’ Contracted Sales Deteriorated Further in July, with a Regionally K-Shaped Property Recovery

Overview

This report focuses on China’s real estate sales data, with the key conclusion that developers’ contracted sales deteriorated further in July. Although new home sales in first-tier cities improved significantly and some high-tier cities showed signs of stabilization, downward pressure in lower-tier cities remained severe, resulting in more pronounced geographical K-shaped divergence in the property market.

Core views

Nomura believes that China’s property market has not achieved a broad-based recovery. The widening decline in contracted sales by the top 100 developers may be related to increasing downward pressure on home prices, particularly in lower-tier cities. Improvement in higher-tier cities previously often signaled a nationwide recovery, but this cycle may be different: the AI boom is diverting resources from traditional cities to smart cities, widening divergence between cities; meanwhile, the Politburo meeting reiterated the need to stabilize the property market, but most conventional policy tools have already been exhausted, while regional divergence makes policymaking and sector cleanup more difficult.

Analysis framework

The report compares year-on-year growth rates for developers’ contracted sales, new home sales area in major cities, second-hand home transaction volumes in major cities, and city-tier groups to assess trends in China’s property demand, home-price pressure, and regional divergence.

Methodology notes

• Macro and Industry Cycle AnalysisYear-on-Year Growth Analysis

  Year-on-Year Growth Rate

  By comparing July with the same period last year and with June’s growth rate, the report assesses whether sales momentum improved or deteriorated.

• Regional Structural AnalysisCity-Tier Segmentation

  Divergence Among First-, Second-, and Lower-Tier Cities

  Sales performance is separated by city tier to identify the structural difference between stabilization in higher-tier cities and deterioration in lower-tier cities.

• Structural Divergence AnalysisK-Shaped Divergence

  Geographical K-Shaped Divergence

  This refers to divergent performance across regions or city clusters, with some cities stabilizing or improving while others continue to weaken, thereby weakening the signal of a nationwide recovery.

Asset mapping & comparison

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

• Chinese Real Estate Developers

  Directly Relevant

  Strengths

  Improvement in first-tier city sales and statements supporting property-market stabilization provide some marginal support.

  Weaknesses

  The widening decline in contracted sales by the top 100 developers indicates that sales collections and inventory destocking pressures remain high.

  Comparison

  July’s YoY -18.3% deteriorated significantly from June’s YoY -9.6%.

  Risks

  Further home-price declines, inventory pressure in lower-tier cities, and diminishing policy effectiveness.

• Housing Markets in First-Tier Cities

  Positive Divergence Beneficiary

  Strengths

  New home sales grew 16.6% year on year in July, a significant improvement from June.

  Weaknesses

  The improvement may have been influenced by a low base and may not spread nationwide.

  Comparison

  Performance was significantly better than in second-tier and lower-tier cities.

  Risks

  If household income expectations or credit demand remain insufficient, the sustainability of stabilization still needs to be verified.

• Housing Markets in Lower-Tier Cities

  Primary Drag

  Strengths

  Potential policy support may alleviate some of the pressure.

  Weaknesses

  Downward pressure on home prices is greater, and declines in new home sales are deeper.

  Comparison

  Performance was weaker than in first-tier cities, contributing to geographical K-shaped divergence.

  Risks

  Slow inventory clearance, developers’ funding-chain pressure, and limited room for local government policies.

Key data

• July Contracted Sales of the Top 100 DevelopersYoY -18.3%Deteriorated further from YoY -9.6% in June.
• Contracted Sales of the Top 100 Developers from January through JulyYoY -14.6%The report notes that the figure was YoY -19.3% in 2025 for comparison.
• July New Home Sales Area in 20 Major CitiesYoY +3.2%June was YoY -6.7%; the improvement was mainly attributable to a low base.
• July Second-Hand Home Sales Volume in 18 Major CitiesYoY +9.4%Slowed from YoY +12.3% in June.
• July New Home Sales Growth in First-Tier CitiesYoY +16.6%June was YoY -2.2%, making first-tier cities the driver of the improvement in new home sales across 20 cities.
• Performance of Second-Tier and Lower-Tier CitiesSecond-tier cities were broadly flat, while lower-tier cities experienced deeper declinesHome-price and sales pressure in lower-tier cities remained the primary drag.

Impact & implications

Continued pressure on property sales suggests that developers’ cash flow and investment appetite may remain weak, weighing on the property value chain, local government finances, and household confidence. Stabilization and improvement in first-tier cities have improved the local demand signal, but if lower-tier cities continue to decline, a nationwide property recovery remains difficult to confirm, and policy may need to become more targeted rather than relying on a single nationwide stimulus.

Risks

• Downward pressure on home prices continues to intensify, especially in lower-tier cities.
• Deterioration in developers’ contracted sales increases cash flow pressure.
• Improvement in first-tier cities fails to broaden into a nationwide recovery.
• Most conventional policy tools have already been exhausted, and the marginal effectiveness of subsequent policies may weaken.
• Regional K-shaped divergence delays property-sector cleanup and necessary policy action.

What to watch

• Subsequent monthly year-on-year changes in contracted sales of the top 100 developers.
• Whether the improvement in new home sales in first-tier cities proves sustainable.
• Changes in home prices, transaction volumes, and inventory in second-tier and lower-tier cities.
• The specific strength of property-market stabilization policies implemented after the Politburo meeting.
• Whether the growth rate of second-hand home transactions continues to slow.