Housing Activity Continues to Weaken; Beijing's Moderate Easing Is Unlikely to Alter the Long-Term Adjustment

Overview

The report notes that JPMorgan's Housing Activity Index remains weak, with starts, completions, sales, and developers' funding sources all continuing to contract substantially. Beijing introduced a new round of moderate easing measures ahead of the "Golden September, Silver October" season, but the incremental policies are limited and are unlikely to materially reverse homebuyer confidence or alter the market's long-term adjustment trend.

Core views

China's real estate market is undergoing a sustained volume adjustment rather than a broad-based, sustainable recovery. Policymakers are more focused on real estate stabilization, local government debt resolution, reform of small financial institutions, and capital-market resilience. The core objective is to repair balance sheets and reduce risks, rather than restart a real estate-led growth cycle. Existing-home markets in Tier-1 cities are relatively stable due to lower inventories and improved transactions, but the recovery is narrow, lower-tier cities remain weak, and momentum in upgrade demand is also fading.

Analysis framework

The report assesses housing-market conditions and the effectiveness of policy transmission by combining JPMorgan's Housing Activity Index, National Bureau of Statistics 70-city home-price data, residential starts and sales data, developer financing, inventory and transaction indicators, as well as local policies and central policy guidance.

Methodology notes

• Macro Conditions TrackingHousing Activity Index

  Composite housing activity indicator

  Assesses the extent and trend of contraction in real estate activity through high-frequency or monthly indicators including starts, completions, sales, and developers' funding sources.

• Real Estate Price Analysis70-City Home Price Tracking

  Month-over-month changes in new and existing home prices

  Uses National Bureau of Statistics 70-city home-price data to compare price performance and adjustment magnitude across city tiers and housing-market segments.

• Policy AnalysisPolicy Transmission Assessment

  Local easing and central policy stance

  Evaluates the marginal impact of local measures, such as home-purchase restrictions and housing provident fund loans, on transactions and confidence, while incorporating central policies to assess stimulus intensity and policy objectives.

Asset mapping & comparison

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

• China Real Estate Market

  Directly Related

  Strengths

  Tier-1 existing-home markets are supported by lower inventories and more stable transactions, while home prices in Shanghai, Guangzhou, and Shenzhen have performed relatively better.

  Weaknesses

  Starts, sales, land purchases, and real estate investment remain weak, homebuyer confidence is insufficient, and recovery in lower-tier cities is limited.

  Comparison

  Tier-1 cities and pockets of upgrade demand are performing better than lower-tier cities, but this does not constitute a broad-based recovery.

  Risks

  If household wealth expectations, local fiscal pressures, or developers' funding conditions deteriorate, the adjustment in transaction volumes may be prolonged; if policy continues to focus primarily on risk resolution, the strength of demand recovery may fall short of market expectations.

Key data

• July residential starts year over year-27.9%Compared with -26.6% in June, indicating a deeper contraction.
• July residential sales year over year-15.5%Housing demand remains weak.
• 70-city new-home prices month over month-0.18%Pre-seasonally adjusted data; the pace of decline appears to be stabilizing.
• 70-city existing-home prices month over month-0.29%Pre-seasonally adjusted data.
• Beijing new-home prices month over month-0.3%Beijing underperformed other Tier-1 cities.
• New-home price decline from the 2021 peak-14%Reflects price adjustment at the national level.
• Existing-home price decline from peak-23%Existing-home prices have seen a larger adjustment.

Impact & implications

Policy easing in Beijing and other Tier-1 cities may marginally improve transaction conditions, but historical experience suggests that the market impact of gradual local-level easing is limited. Real estate's drag on growth will persist; while new-economy sectors provide support, they are not yet sufficient to fully offset the gap created by the housing downturn. The market is more likely to remain differentiated, with Tier-1 cities and pockets of upgrade demand relatively stable while lower-tier cities continue to face pressure.

Risks

• Housing activity contraction continues or deepens, weighing on economic growth.
• Local policy easing fails to effectively restore homebuyer confidence.
• Inventory and demand pressures persist in lower-tier cities, widening divergence across cities.
• Developer financing and balance-sheet repair progress falls short of expectations.
• New-economy growth contributions are insufficient to offset the drag from the real estate downturn.

What to watch

• Whether home-purchase restrictions, housing provident fund policies, and replacement-home policies in Beijing and other Tier-1 cities are further eased.
• Transaction volumes in 30 cities, existing-home transactions, and listing-price trends during the "Golden September, Silver October" period.
• Year-over-year changes in residential starts, sales, completions, land purchases, and developers' funding sources.
• Whether new and existing home prices across 70 cities shift from narrowing declines to broader stabilization.
• Whether central policy introduces additional measures on destocking, urban renewal, or larger-scale demand stimulus.