China Property Weekly Transactions Improved, Industry View Remains In-Line

Overview

This report is Morgan Stanley’s weekly database tracking of the China real estate industry, focusing on new and second-hand registration sales, turnover rates, listing price tracking index, and broker index for the week ended July 5, 2026. The report shows short-term transaction data improved versus the previous week, especially with new home sales turning from year-over-year declines to year-over-year growth, but new home sales remain negative year-over-year on a year-to-date basis.

Core views

The core view is that China real estate transactions improved on a weekly basis: 50-city new home sales rose 22% year-over-year, 10-city second-hand sales rose 4% year-over-year, and turnover rates increased from 53% to 68%. By city tier, first-tier city new home sales are still down 6% year-over-year, but second-hand sales are up 14%; second-tier and third-tier city new home sales rose 29% and 22%, respectively. However, cumulative new home sales remain down 11% year-over-year, indicating that the one-week improvement has not yet fully changed the weak trend for the year.

Analysis framework

The report uses a high-frequency industry database tracking method, comparing weekly new home registration counts, second-hand registration counts, year-to-date cumulative year-over-year figures, turnover rates, and price and broker sentiment indicators by city tier, and benchmarking them against the prior week to assess changes in real estate demand and transaction momentum.

Methodology notes

• High-Frequency Industry TrackingWeekly Database Tracking

  Use weekly registration sales, turnover rates, and intermediary indicators to observe marginal changes in the real estate market.

  The method emphasizes year-over-year changes, prior-week comparison, and city-tier segmentation, making it suitable for capturing short-term recovery or weakening signals, but it cannot on its own replace company-level earnings, balance-sheet, and policy analysis.

• Relative Industry RatingMorgan Stanley Industry View

  In-Line means the expected industry performance over the next 12 to 18 months is broadly in line with the relevant market benchmark.

  The industry view disclosed in the report is In-Line, meaning analysts are not giving a significantly bullish or significantly cautious industry view relative to the benchmark.

Asset mapping & comparison

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

• China Property sector

  Core covered sector

  Strengths

  Weekly new and second-hand transaction data both show year-over-year improvement, and the turnover rate rose, indicating marginal short-term demand recovery.

  Weaknesses

  Year-to-date new home sales are still down 11% year-over-year, so fundamental recovery is not yet stable.

  Comparison

  Second-tier and third-tier city new home sales performed better than first-tier cities; first-tier city second-hand sales outperformed second-tier city sales.

  Risks

  Recovery persistence may be insufficient, property price expectations remain weak, policy support may be less than expected, and developer credit risk may still weigh on valuations.

• Hong Kong-listed and A-share China developers

  Relevant stock pool covered by the rating table

  Strengths

  Some large developers have higher liquidity, stronger financing capacity, and greater market visibility.

  Weaknesses

  Company-level ratings are diverging, and cumulative industry sales remain weak, so stock performance may be affected by balance sheets and project structure.

  Comparison

  The rating table includes Overweight, Equal-weight, and Underweight names, showing clear differences in fundamental outlook and risk preference within the sector.

  Risks

  Sales recovery may fall short of expectations, financing conditions could tighten, project impairments, policy changes, and market liquidity swings may weigh on the sector.

Key data

• 50-city New Home Weekly Registrations+22% YoYPrevious week was -11% YoY; year-to-date is -11% YoY.
• 10-city Second-hand Home Weekly Registrations+4% YoYPrevious week was -1% YoY; year-to-date is +5% YoY.
• Overall Turnover Rate68%Previous week was 53%; first-tier cities 90%, second-tier cities 68%.
• First-tier City New Home Sales-6% YoYPrevious week was -19% YoY, and the decline narrowed.
• Second-tier City New Home Sales+29% YoYPrevious week was -13% YoY, turning positive.
• Third-tier City New Home Sales+22% YoYPrevious week was +10% YoY, and the growth rate accelerated.
• First-tier City Second-hand Sales+14% YoYPrevious week was roughly flat.
• Second-tier City Second-hand Sales-3% YoYPrevious week was -0.4% YoY.
• Central China six-city second-hand listing price tracking index16.7%Previous week was 17.0%.
• First-tier City Property Broker Index54.7Previous week was 51.6.

Impact & implications

The one-week data improvement provides marginal support to sentiment on the China real estate space, especially as new-home transactions, second-hand transactions, and turnover rates improved together, which may ease worries about short-term demand. But year-to-date new home sales remain down year-over-year, and first-tier city new homes are still negative, so this is better interpreted as a phased recovery signal rather than confirmation that the sector trend has reversed.

Risks

• One-week transaction improvement may be driven by base effects, timing, or short-term factors; persistence needs to be verified by subsequent weekly data.
• Year-to-date new home sales remain down year-over-year, indicating that demand recovery in the sector has not been fully confirmed.
• If price and listing-price indicators continue to be under pressure, they could weaken buyer expectations and developer margins.
• The report discloses that Morgan Stanley has investment banking or other service relationships with some covered companies; investors should note the potential conflict of interest.

What to watch

• Whether the year-over-year trajectory and year-to-date cumulative decline in 50-city new home sales continue to improve in coming weeks.
• Whether 10-city second-hand sales can maintain positive growth, especially second-hand transaction momentum in first-tier cities.
• Whether overall and city-tier-specific turnover rates remain at elevated levels.
• Whether the Central China six-city second-hand listing price tracking index and first-tier city broker index continue to improve.
• The impact on sector valuations from policy easing, financing support, and key developer credit events.