Housing price stabilization in first-tier cities extended into April; remain positive on SOE developers with strong first-tier city exposure

Overview

This report tracks April housing prices, sales, and construction data for China’s real estate sector. The core conclusion is that the stabilization trend in first-tier city housing prices has continued, especially in secondary homes. However, nationwide sales improvement is mainly driven by a low base, while new starts and completions remain weak. The sector as a whole is still in a phase of mild stabilization rather than a strong recovery.

Core views

The report argues that the real estate sector underperformed the Hang Seng Index on May 18 mainly because the NBS data lacked a major upside surprise, prompting profit-taking after prior outperformance. Fundamentally, first-tier cities continued to outperform the national average, with Shanghai standing out in particular. JPMorgan expects first-tier city secondary home prices in 2026 to stabilize in a relatively moderate manner, while forecasting full-year nationwide residential sales value to fall 7% year on year, new starts to decline 18%, and completions to decline 19%.

Analysis framework

The report mainly cross-checks the NBS 70-city house price index, Centaline’s first-tier city secondary home index, nationwide residential sales value, new starts, completions, and inventory-related indicators, combining month-on-month changes, year-on-year changes, and deviations from the 2018-2021 average to judge the true state of the cycle.

Methodology notes

• High-frequency industry data trackingCross-validation of NBS and Centaline house prices

  Use official statistics and brokerage market indices together to observe signals of housing price stabilization

  NBS data showed that secondary home prices in first-tier cities rose 0.4% month on month in April; Centaline’s first-tier city secondary home index also rose 0.6% month on month. The two data sources point in the same direction, strengthening the judgment that first-tier city housing prices are stabilizing.

• Cycle and base effect analysisComparison of year on year, month on month, and long-term averages

  Distinguish genuine demand recovery from year-on-year improvement driven by a low base

  Residential sales value narrowed from -15% year on year in March to -7% in April, but relative to the 2018-2021 average, the decline widened from -40% to -53%, indicating that year-on-year improvement does not equal a strong recovery in demand.

• Supply-demand analysisImpact of weak new starts on future supply

  Lower new starts may reduce future new home supply and ease price pressure

  New starts fell 27% year on year in April, and the report expects them to remain weak over the next few months. The negative implication is sluggish construction activity; the positive implication is lower future incremental supply, which may help stabilize housing prices.

Asset mapping & comparison

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

• China Overseas Land & Investment (0688)

  One of the SOE developers explicitly favored by the report, benefiting from first-tier city exposure.

  Strengths

  Strong first-tier city presence may make it a beneficiary of stabilization in core city housing prices.

  Weaknesses

  Still affected by weak nationwide real estate sales and sector valuation volatility.

  Comparison

  Compared with broadly exposed private developers, the report prefers developers with first-tier city focus and SOE attributes.

  Risks

  If stabilization in first-tier city housing prices does not continue, or if sales remain weaker than expected, the stock may come under pressure.

• China Resources Land (1109)

  One of the SOE developers explicitly favored by the report.

  Strengths

  Exposure to first-tier and high-tier cities helps capture the housing price stabilization logic.

  Weaknesses

  When sector data do not materially surprise to the upside, profit-taking can be significant.

  Comparison

  Compared with general developers, it better matches the report's preference for SOE names with core-city exposure.

  Risks

  Policy implementation falling short of expectations, weak sales recovery, and valuation pullback.

• China Jinmao (0817)

  One of the SOE developers explicitly favored by the report.

  Strengths

  Benefits from market preference for SOE developers with financing stability and core-city projects.

  Weaknesses

  Still exposed to the real estate cycle and downward pressure on sales.

  Comparison

  The report groups it together with COLI and CR Land as a preferred SOE developer basket.

  Risks

  If sales year-on-year growth weakens again after the low base effect fades, fundamental support may be insufficient.

• China real estate sector

  The industry under review; the report is more positive on high-quality SOE developers within the sector.

  Strengths

  First-tier city housing prices and secondary home data show consecutive signs of stabilization.

  Weaknesses

  Nationwide sales, starts, and completions remain weak, so the recovery quality is insufficient.

  Comparison

  First-tier cities are clearly better than most lower-tier cities, with Shanghai especially strong.

  Risks

  Lack of upside surprises in the data, profit-taking, and the low base effect masking true demand weakness.

Key data

• Secondary home prices in first-tier cities, month on month+0.4%NBS measure; positive for the second consecutive month in April, with all four first-tier cities posting gains.
• Beijing secondary home prices, month on month+0.4%NBS measure, April data.
• Shanghai secondary home prices, month on month+0.7%NBS measure; standout performance among first-tier cities.
• Guangzhou secondary home prices, month on month+0.2%NBS measure, April data.
• Shenzhen secondary home prices, month on month+0.3%NBS measure, April data.
• Centaline first-tier city secondary home index, month on month+0.6%Slower than the previous +0.9%, but still positive.
• 70-city new home prices, month on month-0.19%The decline in April narrowed slightly from -0.21% in March.
• First-tier city new home prices, month on month+0.1%NBS measure; supported by Shanghai's +0.4% increase.
• Residential sales value, year on year-7%The decline in April narrowed from -15% in March, partly due to a low base.
• Residential sales value vs. 2018-2021 average-53%The decline widened in April from -40% in March, showing demand remains weak.
• 2026 residential sales value forecast-7% Y/YJPMorgan's full-year forecast.
• April new starts, year on year-27%Weaker than -17% in March.
• 2026 new starts forecast-18% Y/YThe report lowers the full-year new starts forecast.
• April completions, year on year-19%Unchanged from -19% in March.
• 2026 completions forecast-19% Y/YFull-year forecast, implying a year-on-year decline of about 17% for the remainder of the year.

Impact & implications

From an investment perspective, the report concentrates opportunities in SOE developers with high first-tier city exposure and stronger balance sheets and financing capabilities, rather than being broadly positive on the entire real estate sector. Mild stabilization in housing prices helps improve market expectations, but weak sales and construction mean the sector recovery still requires continued support from policy, inventory digestion, and demand repair.

Risks

• Stabilization in first-tier city housing prices may only be temporary; if listings rise or demand weakens, prices could come under pressure again.
• The year-on-year improvement in nationwide sales is partly due to a low base, and remains significantly weak versus historical averages.
• Persistent declines in new starts and completions indicate that development investment and sector confidence remain weak.
• The real estate sector previously outperformed the Hang Seng Index; if the data fail to beat expectations, profit-taking may continue.
• If policy support, inventory reduction, or household home-buying confidence falls short of expectations, the stabilization logic for the sector will weaken.

What to watch

• Whether secondary home prices in first-tier cities can maintain positive month-on-month growth over the next few months.
• Changes in Shanghai secondary home inventory months and listing volume.
• Whether the decline in 70-city new and secondary home prices continues to narrow.
• Residential sales value performance once the low base effect fades.
• Whether new starts and land transactions continue to drag on future supply and development investment.
• Sales and valuation performance of SOE developers such as COLI, CR Land, and Jinmao.