China Real Estate Week 21: Leading Indicators Continue to Cool, Shanghai Home Trade-In Progress Is One of the Few Positive Signals

Overview

This report tracks high-frequency data for China real estate in Week 21. On the transaction side, primary home sales turned to year-on-year decline, while secondary home sales still maintained year-on-year growth, but leading indicators and price expectations continued to weaken. On the policy side, the number of units acquired under Shanghai's housing trade-in pilot increased and the program expanded to central urban districts. On the supply side, inventory declined slightly but the destocking cycle remained high, while completions and new starts still showed year-on-year declines. On the market side, developer share prices generally fell, with strong central SOE/local SOE developers relatively resilient, and overall valuations remaining low.

Core views

The core judgment is that the recovery in housing demand remains unstable: the year-on-year resilience in secondary home transactions cannot fully offset weakening leading indicators and declining price expectations; primary home sales, completions, and new starts still show pressure; policy optimization may help sentiment in certain local markets, but improvement in sector fundamentals still requires validation from more transaction, price, and inventory data.

Analysis framework

The report adopts a weekly and month-to-date high-frequency tracking framework, combining indicators including primary home transactions in 75 cities, secondary home transactions, the Centaline Salesman Index, seller asking-price index, new listings, inventory destocking, the GSPC completion tracker, land sales, and cement shipments, and uses NAV discounts and 2026E P/B to assess developer valuation levels.

Methodology notes

• High-Frequency Transaction TrackingPrimary Home Transaction Area in 75 Cities

  Observe changes in primary home demand through weekly and month-to-date transaction area.

  The report uses primary home GFA sold in 75 cities to measure primary housing transaction momentum, while also comparing week-on-week, year-on-year, year-to-date, and relative levels versus 2024 and 2023.

• Secondary Home Leading IndicatorsCSI/CAI, Viewings, Subscriptions, and New Listings

  Measure secondary housing trends using broker and seller price expectations as well as pre-transaction behavior.

  The report notes that sales subscriptions and home viewings declined, CSI fell 1.6 percentage points week on week, and seller asking-price expectations also continued to weaken, indicating weak leading signals for secondary home transactions.

• Completion ForecastGS Property Completion (GSPC) tracker

  Infer real estate completion trends using a float glass supply-demand model.

  Based on the China float glass industry outlook and a proprietary weekly float glass demand model, the GSPC tracker infers that completions have declined by a high double-digit rate year on year since early May, with 2026E down 1% year on year.

• Valuation FrameworkNAV Discount and 2026E P/B

  Compare developer valuation levels using discounts to net asset value and price-to-book ratios.

  The report compares discounts of offshore and onshore covered developers to end-2026 NAV, as well as the relationship between 2026E P/B and cyclical lows in 2008, 2011, and 2014.

Asset mapping & comparison

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

• China Property Developers

  Core sector assets under coverage

  Strengths

  Policy support is still advancing, secondary home transactions maintain year-on-year growth, and the decline in contracted sales for top-100 developers has narrowed versus April.

  Weaknesses

  Primary home sales, completions, and new starts are still declining year on year, while secondary home leading indicators and price expectations have weakened.

  Comparison

  Strong central/local SOE developers performed better in share price terms than private developers and other central/local SOE developers.

  Risks

  Unstable demand recovery, continued decline in price expectations, elevated inventory destocking months, and policy effectiveness falling short of expectations.

• Strong central/local SOE Developers

  Relatively defensive sub-sector

  Strengths

  Average share price fell 3% in Week 21, showing greater resilience than private developers and other central/local SOEs; CMSK and COLI relatively outperformed.

  Weaknesses

  Still dragged by sector sales and valuation pressure, with absolute share price performance remaining negative.

  Comparison

  Private developers fell 5% on average, while other central/local SOE developers fell 6% on average.

  Risks

  If transactions and prices continue to weaken, defensive characteristics may not be enough to offset sector beta pressure.

• Offshore Covered Developers

  Objects of valuation and market performance observation

  Strengths

  Trading at an average 25% discount to end-2026 NAV, with 2026E P/B at 0.6x, indicating low valuations.

  Weaknesses

  Average share price fell 5% in Week 21, weaker than MSCI China's -1%.

  Comparison

  The current NAV discount is shallower than some historical cyclical lows, but P/B is close to cyclical lows.

  Risks

  Offshore liquidity, risk appetite, and credit concerns may continue to suppress valuations.

• Onshore Covered Developers

  A-share property developer observation universe

  Strengths

  Trading at an average 20% discount to end-2026 NAV, with 2026E P/B at 0.5x.

  Weaknesses

  Average share price fell 3% in Week 21, significantly weaker than CSI300's +2%.

  Comparison

  Relative to historical lows, current P/B is low, but the NAV discount may not have reached the deepest level.

  Risks

  If primary home sales and new starts continue to decline, onshore valuation recovery may be delayed.

Key data

• Primary Home SalesWeek 21: -4% WoW, -5% YoYPrimary home transaction area in 75 cities; year-to-date average down 14% YoY, and 14% and 48% lower than 2024 and 2023, respectively.
• Secondary Home SalesWeek 21: +1% WoW, +11% YoYMonth-to-date transaction area -10% MoM and +17% YoY; year-to-date average -1% YoY, and 23% and 6% higher than 2024 and 2023, respectively.
• Secondary Home Price ExpectationsCSI -1.6 ppts WoW, CAI -0.4 ppts WoWBoth broker and seller price expectations continued to decline, with CSI falling for the third consecutive week.
• New Listings-7% WoWSince early May, the pace of listings has been 8% and 20% lower than April 2026 and May 2025, respectively, helping monitor the stability of city transaction prices.
• Shanghai Home Trade-In523 unitsThree months after launch, the program had acquired a total of 523 units across three pilot districts as of early May; Xuhui accounted for nearly 90%, and the program has expanded to all central urban districts.
• InventoryInventory balance -0.2% WoW, -3.7% vs year-end 2025Inventory destocking months in about 20 cities stood at 28.0 months, below the April 2026 average of 29.3 months.
• CompletionsHigh double-digit YoY decline since early May, 2026E YoY -1%From the GSPC tracker; April NBS/GSe metrics were about -19% YoY and about -10% YoY, respectively.
• New StartsExpected decline in the low-20% YoY range since early MayBased on trends in land sales across 300 cities and the national cement shipment ratio.
• Top-100 Developers Contracted SalesMay expected at -1% YoYBetter than April's -10% YoY decline.
• BEKE GTV+8% YoY from April to early MayNew-home GTV -6% YoY, secondary-home GTV +14% YoY.
• Developer Share Price PerformanceStrong central/local SOEs -3%, private developers -5%, other central/local SOEs -6%In Week 21, covered strong central/local SOEs saw a smaller average decline; CMSK and COLI fell about 1% and 2%, respectively.
• Covered Developer ValuationOffshore/onshore at 0.6x/0.5x 2026E P/B, respectivelyOffshore and onshore coverage trade at 25% and 20% discounts, respectively, to end-2026 NAV.

Impact & implications

For investors, the implication is that the real estate sector still faces near-term pressure from weakening transaction quality and price expectations, especially as primary homes, new starts, and the completion chain have yet to show a clear inflection point. Policy progress such as Shanghai's home trade-in program may improve confidence in selected local markets, and low valuations also provide some margin of safety, but before leading indicators stabilize again, the sector is better suited for focusing on structurally stronger central/local SOE developers and signals of improvement in high-frequency data.

Risks

• Continued year-on-year decline in primary home sales may drag on developers' cash flow and land acquisition willingness.
• Although secondary home transactions are showing year-on-year growth, leading indicators such as subscriptions, home viewings, and price expectations are weakening.
• Inventory destocking months remain high, and if transactions slow, destocking pressure may rise again.
• Year-on-year declines in completions and new starts may continue to affect demand along the property chain.
• Policy pilot effects may vary by region, and Shanghai's expanded home trade-in program may not be quickly replicated nationwide.
• Low developer valuations do not mean fundamentals have bottomed out, and share prices may still be affected by risk appetite and earnings downgrades.

What to watch

• Whether weekly primary home transaction area in 75 cities turns back to year-on-year growth.
• Whether secondary home transactions, sales subscriptions, home viewings, CSI, and CAI stabilize simultaneously.
• The number of acquisitions and transaction conversion effectiveness after Shanghai's home trade-in program expanded to central urban districts.
• Whether inventory balance and inventory destocking months continue to decline.
• Whether the GSPC tracker, NBS completion data, new starts, and cement shipment indicators improve.
• Subsequent trends in top-100 developers' contracted sales and BEKE's new-home and secondary-home GTV.
• Whether the share price divergence among strong central/local SOEs, private developers, and other central/local SOE developers widens.