China real estate transactions in Week 25 declined due to the holiday drag, but underlying momentum remained stable

Overview

This report is Goldman Sachs’ Week 25 weekly report on China’s real estate sector, focusing on new home and existing home transactions, search and viewing activity, listing supply, inventory, completion and new-start signals, as well as developer share prices and valuations. The core conclusion is that the Dragon Boat Festival holiday depressed headline transaction volumes for the week, but after excluding the holiday effect, underlying transaction momentum remained stable; meanwhile, inventory continued to edge lower and home prices improved month-on-month, though year-on-year pressure on sales and completions persisted.

Core views

First, the weekly decline in market activity was mainly driven by light trading during the Dragon Boat Festival holiday from June 19 to 21 and does not fully represent deterioration in underlying demand. Second, after excluding the holiday effect, both new home and existing home transactions improved sequentially and were above June MTD daily average levels, indicating decent short-term transaction momentum. Third, shrinking listing supply provided some support for prices, with transaction prices in monitored cities rising 0.8% week-on-week. Fourth, developer fundamentals remain weak: contracted sales of the top 100 developers are expected to decline 8% year-on-year in June, while completions and new starts also continue to fall year-on-year. Fifth, sector valuations for developers are at trough levels in the downturn cycle, with offshore and onshore covered names trading at 38% and 31% discounts to 2026E NAV, respectively, and at 2026E P/B of 0.5x and 0.4x.

Analysis framework

The report combines high-frequency weekly data with month-to-date data, comparing changes in new home transactions, existing home transactions, search activity, subscription sales, site visits, listing supply, inventory, and prices, and linking industry data with developer share prices, NAV discounts, and P/B valuations. Completion assessment uses Goldman Sachs’ GSPC tracker, together with the float glass supply-demand model, Wind, NBS, and industry data for inference.

Methodology notes

• Industry high-frequency trackingChina real estate weekly tracker

  Weekly tracking of transactions, inventory, and prices

  Using samples of about 75 cities for transactions and about 20 cities for inventory to observe changes in new homes, existing homes, inventory, and prices, and using week-on-week, year-on-year, and month-to-date metrics to gauge short-term real estate activity.

• Completion forecastingGSPC tracker

  Goldman Sachs property completion tracker

  Based on the outlook for China’s float glass industry and Goldman Sachs’ proprietary weekly float glass demand model, GSPC infers downstream supply and demand to estimate changes in monthly completion area.

• Equity assessmentGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile

  Goldman Sachs’ factor profile is based on metrics such as forecast sales, EBITDA, EPS, ROE, ROCE, CROCI, and valuation multiples, comparing individual stocks with the market and sector peers to form growth, return, multiples, and composite percentiles.

• M&A assessmentM&A Rank

  Potential acquisition probability ranking

  Goldman Sachs uses qualitative and quantitative factors to assess the probability of a company becoming an acquisition target, where 1 indicates high probability, 2 medium probability, and 3 low probability; high or medium probability may be incorporated into target price considerations.

• Data platformQuantum

  Goldman Sachs proprietary financial database

  Quantum provides historical financial statements, forecasts, and ratio data, which can be used for in-depth single-company analysis and cross-sector, cross-market comparisons.

Asset mapping & comparison

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

• Poly A（600048.SS）

  An A-share developer explicitly mentioned in the report, rated Neutral

  Strengths

  Its share price fell 4% in Week 25, performing better than the 12% average decline of strong SOE developers.

  Weaknesses

  It still operates under the broader sales and valuation pressure facing China’s real estate sector.

  Comparison

  It was more resilient than the groups of strong SOEs, private developers, and other SOE developers.

  Risks

  Further weakness in new home sales, wider sector valuation discounts, and policy support falling short of expectations.

• China property developers sector

  The core industry covered in the report

  Strengths

  After excluding the holiday effect, transaction momentum remained positive; months of inventory destocking declined versus the May average, and shrinking listing supply supported prices.

  Weaknesses

  In June, new home transactions, top 100 developers’ contracted sales, completions, and new starts all face year-on-year declines.

  Comparison

  Year-to-date existing home transactions have outperformed new homes; offshore developers fell more than MSCI China for the week, while onshore developers underperformed the CSI 300.

  Risks

  Unstable sales recovery, slow inventory destocking, declines in completions and new starts, and recurring financing conditions and credit risks.

• Offshore covered developers

  Goldman Sachs’ valuation basket of Hong Kong-listed/offshore developers

  Strengths

  They trade at an average 38% discount to 2026E NAV and at 2026E P/B of 0.5x, with valuations already close to historical lows.

  Weaknesses

  Their share prices fell 14% on average in Week 25, underperforming MSCI China’s -4%.

  Comparison

  The valuation discount is close to the trough level of 2H2008, while P/B is lower than some historical trough comparisons.

  Risks

  US dollar financing, credit spreads, sales collections, and changes in risk appetite may amplify volatility.

• Onshore covered developers

  Goldman Sachs’ valuation basket of A-share/onshore developers

  Strengths

  They trade at an average 31% discount to 2026E NAV and at 2026E P/B of 0.4x.

  Weaknesses

  Their share prices fell 5% on average in Week 25, underperforming the CSI 300’s +3%.

  Comparison

  Their valuation multiples are below the P/B levels seen at historical troughs in 2H2008, 2H2011, and 1H2014.

  Risks

  A-share risk appetite, policy expectations, and insufficient fundamental validation may limit valuation recovery.

• BEKE

  A related platform indicator for real estate transaction activity

  Strengths

  Total GTV from April to June MTD is expected to grow 2% year-on-year, with existing home GTV up 11% year-on-year.

  Weaknesses

  New home GTV is expected to decline 23% year-on-year.

  Comparison

  Existing home transactions are clearly outperforming new home transactions.

  Risks

  Weaker expectations for existing homes, slower site visits, and softer subscription sales may affect transaction conversion.

• Indices related to building materials, construction, home furnishing, and home appliances

  Assets linked to the real estate value chain

  Strengths

  They may benefit from demand transmission when real estate transactions and completions improve.

  Weaknesses

  The report’s GSPC and new-start signals show that completions and starts remain under pressure.

  Comparison

  Compared with developers, related industry-chain assets are more dependent on completions, renovation, and post-cycle demand.

  Risks

  Declining completions, high-double-digit declines in starts, and weak household homebuying expectations.

Key data

• Week 25 new home transactions-5% week-on-week, -18% year-on-yearNew home search activity was -0.4% week-on-week.
• Week 25 existing home transactions-20% week-on-week, -13% year-on-yearPrice appreciation expectations of both sellers and agents weakened slightly.
• June MTD new home transaction area-17% month-on-month, -21% year-on-yearBased on the median measure.
• June MTD existing home transaction area-9% month-on-month, +6% year-on-yearBased on the median measure.
• Year-to-date new home transaction area-12% year-on-year, -11%/-42% versus 2024/2023, respectivelyBased on the average measure.
• Year-to-date existing home transaction areaFlat year-on-year, +20%/+9% versus 2024/2023, respectivelyExisting homes have performed more steadily than new homes.
• Inventory balanceAbout -0.1% to -0.2% week-on-week, -4.7% versus end-2025Months of inventory destocking stood at 27.7 months, below the average 28.5 months in May 2026.
• Top 100 developers contracted sales outlookJune expected at -8% year-on-yearMay was -2% year-on-year, indicating greater pressure in June.
• GSPC completion trackingJune 2026 expected at about -20% year-on-year; full-year 2026 expected at -1% year-on-yearBased on Goldman Sachs’ float glass supply-demand model and related data.
• New-start outlookJune expected to decline by high-twenties percent year-on-yearBased on land sales trends in 300 cities and the nationwide cement shipment ratio.
• BEKE GTVApril to June MTD expected at +2% year-on-yearOf which new homes/existing homes are -23%/+11%, respectively.
• Developer share price performanceStrong SOE developers fell 12% on average for the week; Poly A fell 4% for the weekPoly A (600048.SS, Neutral) outperformed relatively; private developers and other SOE developers fell 14% and 4% on average, respectively.
• ValuationOffshore/onshore covered names trade at average 38%/31% discounts to 2026E NAV, with 2026E P/B of 0.5x/0.4xThe report states that P/B valuations are at trough levels in the downturn cycle.

Impact & implications

The investment implication of the report is broadly neutral: short-term transaction momentum has not materially deteriorated due to holiday disruption, and existing homes and secondary-market transactions are relatively more resilient, while inventory destocking and shrinking supply help stabilize prices; however, new home sales, top 100 developers’ contracted sales, completions, and new starts remain on a year-on-year downward trajectory, and further evidence is still needed for recovery in developers’ earnings and cash flow. On the valuation side, low P/B and wide NAV discounts provide some margin of safety, but before a fundamental recovery in the sector is confirmed, the sustainability of any rebound remains constrained by policy, sales, and credit risks.

Risks

• If underlying demand beyond the Dragon Boat Festival holiday continues to weaken, the current judgment of post-holiday momentum may be disproved.
• The year-on-year decline in new home sales and the widening drop in top 100 developers’ contracted sales may weigh on developers’ cash flow.
• Continued declines in completions and new starts may affect demand in downstream real estate-related industries.
• A slight weakening in existing home price expectations may affect transaction conversion and listing behavior.
• Although developer valuations are low, if policy, financing, or sales improvement falls short of expectations, NAV discounts and low P/B may persist.
• Offshore developers’ share prices underperformed MSCI China, indicating that market risk appetite remains weak.

What to watch

• Whether full-month June new home and existing home transactions continue the improvement seen after excluding the holiday effect.
• Whether the final year-on-year decline in top 100 developers’ contracted sales is close to the report’s forecast of -8%.
• Whether months of inventory destocking can continue to fall from 27.7 months.
• Whether shrinking listing supply continues to support transaction prices.
• The validation relationship between GSPC completion tracking and NBS completion data.
• Whether new starts, land sales, and the cement shipment ratio continue to confirm a high-double-digit decline.
• The share price divergence of Poly A and strong SOE developers relative to private developers and other SOE developers.
• Whether NAV discounts and 2026E P/B for offshore and onshore developers show recovery.