China's Developers' Contracted Sales Continued to Deteriorate in July, with Deeper Regional K-Shaped Divergence in the Property Market

Overview

This report tracks the July contracted sales of Chinese property developers and new and second-hand home sales in major cities. Nomura points out that the decline in sales among the top 100 developers widened, likely mainly due to increased downward pressure on home prices, particularly in lower-tier cities; meanwhile, first-tier cities showed clearer signs of stabilization.

Core views

The core view is that China's property market has not entered a broad-based recovery but is instead showing clear geographic K-shaped divergence: improvement in first-tier cities and pressure in lower-tier cities. Historically, stabilization in higher-tier cities may have signaled a broader recovery, but this time may be different because resources are migrating from traditional cities to smart cities, weakening the spillover effect. On the policy front, the mid-year Politburo meeting reiterated the need to stabilize the property market, but most conventional policy tools have already been used, and regional divergence may further delay the policy action needed to resolve issues in the property sector.

Analysis framework

The report uses contracted sales of the top 100 developers, new home sales area in 20 major cities, second-hand home transaction volume in 18 major cities, and performance across city tiers as its main indicators. It compares year-on-year growth-rate changes in July and June and combines policy language with trends in urban resource flows to assess the quality of the property-market recovery.

Methodology notes

• High-Frequency Real Estate Data TrackingContracted Sales Monitoring of the Top 100 Developers

  Use sales of leading developers to measure industry conditions

  Contracted sales of the top 100 property developers reflect developers' cash inflows and the strength of demand; the wider year-on-year decline in July indicates that industry pressure continues to intensify.

• City-Tier AnalysisDivergence Framework for First-, Second- and Lower-Tier Cities

  Compare sales performance by city tier

  The report compares improvement in first-tier cities, broadly stable performance in second-tier cities, and deeper declines in lower-tier cities to assess whether the recovery has broad spillover potential.

• Policy Constraint AnalysisGeographic K-Shaped Divergence and Policy Response Framework

  Divergence increases the difficulty of policymaking

  When higher-tier cities stabilize while lower-tier cities continue to decline, policy signals may become inconsistent, delaying more systematic measures to resolve and stabilize the property sector.

Asset mapping & comparison

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

• Chinese Property Developers

  Directly relevant

  Strengths

  Improved sales in first-tier cities may support project sell-through and cash collection for some higher-quality developers.

  Weaknesses

  The widening decline in overall sales among the top 100 developers, along with continued pressure on home prices and demand in lower-tier cities, continues to weigh on the sector.

  Comparison

  Unlike previous recoveries in which higher-tier cities drove the national market, the current improvement is more concentrated in first-tier cities.

  Risks

  Further sales declines, additional weakness in home prices, delayed policy responses, and intensifying inventory and debt pressures in lower-tier cities.

• Chinese Macroeconomy

  Indirectly relevant

  Strengths

  Stabilization in first-tier cities and the return of new home sales area to positive growth may marginally ease expectations of a property-sector downturn.

  Weaknesses

  The property sector remains a significant drag on demand, credit, and local government finances.

  Comparison

  New home sales area has partially returned to positive growth, but developers' sales continue to deteriorate, indicating divergence in both volumes and prices as well as across cities.

  Risks

  The property-sector drag on consumption and investment confidence, with insufficient policy tools extending the recovery period.

Key data

• July contracted sales of the top 100 developersYear-on-year -18.3%Deteriorated further from the 9.6% year-on-year decline in June.
• Year-to-July contracted sales of the top 100 developersYear-on-year -14.6%The report also notes that the corresponding figure for 2025 was a 19.3% year-on-year decline.
• July new home sales area in 20 major citiesYear-on-year +3.2%The figure was -6.7% year on year in June; the return to positive growth in July was mainly due to a low base.
• July second-hand home transaction volume in 18 major citiesYear-on-year +9.4%Slowed from 12.3% year-on-year growth in June.
• July new home sales in first-tier citiesYear-on-year +16.6%The figure was -2.2% year on year in June, indicating signs of stabilization in first-tier cities.
• Performance of lower-tier citiesDeeper declineThe report does not disclose specific figures but clearly states that pressure is greater in lower-tier cities.

Impact & implications

For investment and macroeconomic assessment, the July data indicate that the drag from real estate has not been removed. If stabilization in first-tier cities cannot spread to second- and lower-tier cities, developers' cash flows, the land market, local government finances, and household confidence may remain under pressure. Although policymakers continue to emphasize stabilizing the property market, the divergent landscape and declining marginal effectiveness of conventional tools suggest that the market may require more targeted policies for inventory reduction, ensuring delivery of pre-sold homes, or debt resolution.

Risks

• Downward pressure on home prices in lower-tier cities continues to increase.
• The decline in sales among the top 100 developers widens further, increasing cash-flow pressure.
• Stabilization in first-tier cities fails to spread into a nationwide recovery.
• Geographic K-shaped divergence complicates policymaking and may delay necessary industry cleanup measures.
• Most conventional property-sector support tools have already been used, and their marginal effectiveness may decline.

What to watch

• Whether the year-on-year decline in the top 100 developers' contracted sales narrows in subsequent months.
• Whether improved sales in first-tier cities can spread to second- and lower-tier cities.
• Downward pressure on home prices and the pace of inventory reduction in lower-tier cities.
• The strength and targeting of policies to stabilize the property market following the mid-year Politburo meeting.
• Whether the growth rate of second-hand home transaction volume continues to slow.