Tier-1 City Resilience Remains, but Broad China Property Weakness May Extend into August

Overview

Goldman Sachs' tracking indicates that China's property market remained broadly weak in July 2026. New and existing home prices continued to decline month on month, while sales, starts, completions, and the land market showed no broad-based improvement; however, price performance in Tier-1 cities, supply-demand balance in the existing-home market, rents, and land acquisition activity by quality developers provided localized positive signals.

Core views

Goldman Sachs expects average new and existing home prices to decline in August at a pace similar to July, while the recovery momentum in Tier-1 cities is likely to continue; year-on-year declines in new-home sales volume and value will probably remain at current levels; completions and new starts will still decline significantly year on year; and year-on-year growth in existing-home transaction volume across 15 major cities may improve to the mid-single digits.

Analysis framework

The report combines National Bureau of Statistics data on home prices in 70 cities and property development, existing-home transactions in 15 cities, listings in 100 cities, rents in 50 cities, land transactions, and developer land-acquisition tracking to conduct monthly cross-validation of prices, sales, construction, financing, and land banks, and to formulate its August forecasts.

Methodology notes

• Market TrackingMonthly Cross-Validation of Property Indicators

  Assesses marginal changes in the property market by integrating high-frequency and official indicators including prices, transactions, construction, land, and rentals.

  The report measures market conditions using year-on-year and month-on-month changes, with particular focus on differences among Tier-1, Tier-2, and lower-tier cities.

• Supply-Demand AnalysisExisting-Home Supply-Demand Balance Monitoring

  Uses listings, transaction momentum, search activity, rents, and rental yields to assess supply pressure and demand shifts in the existing-home market.

  The continued decline in listings across 100 cities and the month-on-month recovery in rents are viewed as positive signs of easing existing-home supply pressure in higher-tier cities.

• Developer ProfitabilityLand Bank and Project Gross Margin Analysis

  Assesses the quality of developers' land-bank replenishment using land acquisition value as a percentage of contracted sales, city-tier distribution, and estimated project gross margins.

  Quality developers' active land-bank replenishment in core cities and relatively high project gross margins reflect their competitive advantages and industry consolidation capabilities.

Asset mapping & comparison

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

• China Property Developer Equities

  Industry research coverage universe

  Strengths

  Quality developers can replenish land banks in core cities with higher potential project gross margins and benefit from industry consolidation.

  Weaknesses

  Nationwide sales, starts, completions, and the land market remain in a downcycle, with insufficient recovery in industry demand.

  Comparison

  Assets associated with Tier-1 and core Tier-2 cities are relatively more resilient, while lower-tier cities continue to face greater price and demand pressure.

  Risks

  Weaker-than-expected policy support, continued deterioration in sales, tighter financing conditions, and declining returns on land investment.

• China Jinmao (0817.HK)

  Covered developer mentioned in the report

  Strengths

  Its acquisition of a high-profile residential site in Beijing's Haidian district demonstrates active land-bank replenishment.

  Weaknesses

  High-priced land acquisitions place greater demands on future sales absorption, funding arrangements, and realization of project profits.

  Comparison

  Compared with typical developers, its land acquisition activity is more proactive and focused on higher-tier cities.

  Risks

  High land prices in core cities, weaker-than-expected project sell-through, and continued property market weakness.

• China Overseas Land & Investment (0688.HK)

  Covered developer mentioned in the report

  Strengths

  Its acquisition of a site in Beijing's Chaoyang district reflects its ability to participate in core-city land markets.

  Weaknesses

  Weak industry demand may still weigh on asset turnover and earnings realization.

  Comparison

  Relative to the overall industry, its core-city footprint and land-acquisition capability provide stronger advantages.

  Risks

  Rising land costs, a slow sales recovery, and policy changes.

Key data

• New Home Prices in 70 Cities-0.2% month on month in July 2026Unchanged from June; Tier-1 cities were flat month on month.
• Existing Home Prices in 70 Cities-0.3% month on month in July 2026Unchanged from June; Tier-1 cities rose 0.2% month on month.
• Nationwide New Home SalesSales area -13% year on year and sales value -9% year on year in July 2026Goldman Sachs considers this broadly in line with expectations.
• Construction IndicatorsNew starts -28% year on year and completions -19% year on year in July 2026Construction activity remained subdued.
• Existing Home Transactions+4% year on year and -7% month on month in July across 15 major citiesFlat year on year in the first seven months of 2026.
• Land MarketLand transaction area -27% year on year and transaction value -9% year on year in JulyExcluding industrial land.
• Developer Land AcquisitionsLand acquisition value by tracked developers averaged 105% of contracted sales value in JulyEstimated project-level gross margin was about 26%, with acquisitions highly concentrated in Tier-1 and Tier-2 cities and the top 10 cities.

Impact & implications

At the industry level, evidence of a broad recovery remains lacking, and valuation and fundamental improvement will depend more on policy support, stabilization of home prices in core cities, and a recovery in household income expectations. At the stock level, quality state-owned developers or industry consolidators with financing capacity, land banks in core cities, strong project profitability, and sustained land-bank replenishment capabilities may relatively benefit from market clearing and supply contraction.

Risks

• Home price declines outside core Tier-1 cities may broaden or persist longer than expected.
• New-home sales, household income expectations, and mortgage demand may weaken further.
• Improvement in developer financing may fall short of expectations, affecting delivery of presold homes, investment, and industry credit recovery.
• The land market may remain weak, or project returns from high-priced land acquisitions by quality developers may fall below expectations.
• The scale, implementation speed, or cross-city diffusion of policy easing may fall short of expectations.

What to watch

• Whether core Tier-1 cities such as Shanghai and Shenzhen show stabilization or an upward inflection in home prices, and whether other key cities follow.
• The impact of Beijing's recent policy easing on sales and valuations, and whether Shanghai further relaxes housing provident fund or related housing policies.
• Whether existing-home listings in higher-tier cities continue to decline and whether rents and rental yields can improve further.
• Demand-stimulus policies such as mortgage subsidies, cuts to commercial mortgage rates, and housing provident fund reforms.
• Progress in implementing urban renewal, urban village redevelopment, purchases of existing housing inventory, and financing support for developers.