Mainland China secondary home sales rose 18% year over year, and Hong Kong's valuation index hit a new high

Overview

This report is J.P. Morgan's weekly data monitor on the Mainland China and Hong Kong property markets, covering primary and secondary home sales, leading price indicators, southbound holdings, share price performance, and property credit views. The core conclusion is that year-over-year growth in Mainland China's secondary home sales has strengthened, while Hong Kong residential valuations and transaction sentiment continue to improve, lifting near-term risk appetite for the property sector.

Core views

In Mainland China, the secondary asking price index in tier-1 cities edged down from 19.2 to 19.0, while the agent manager confidence index remained around 55; registered primary home transactions in 60 cities rose 9% year over year, and registered secondary home transactions in 12 cities rose 18% year over year. In Hong Kong, the home price index dipped 0.01% week over week but is up 6.6% year to date, still 3.4 percentage points short of J.P. Morgan's full-year home price growth forecast of 10%-15%; CVI rose to 92.1 and CSI to 69.1, both indicating strong expectations for price increases. On credit, the JACI China HY Property Index rose 0.7% last week. Although Longfor was downgraded by Moody's, J.P. Morgan believes its cash, free cash flow, and debt maturity profile still support its debt-servicing capacity.

Analysis framework

The report uses a high-frequency market monitoring framework that combines transaction registrations, price indices, broker confidence, bank valuation indices, southbound shareholdings, equity price performance, and credit spread performance to assess property sales momentum, price trends, investor preferences, and changes in credit risk.

Methodology notes

• Leading indicatorCentaline secondary asking price index

  Secondary asking price index

  Used to track trends in secondary home asking prices in tier-1 cities; this period the index edged down from 19.2 to 19.0, indicating price pressure remains but changes are modest.

• Sentiment indicatorCentaline manager confidence index

  Manager confidence index

  Surveys broker managers' views on the market outlook; this period it stayed at 55, reflecting broadly stable sentiment.

• Hong Kong valuation indicatorCenta Valuation Index

  Leading indicator of bank property valuation revisions

  A CVI reading above 60 usually indicates banks are raising property valuations; this period it rose from 81.6 to 92.1, the highest since February 2023.

• Credit researchChina HY Property credit view

  Credit assessment of China high-yield property bonds

  Credit risk is assessed through bond index performance, issuer liquidity, free cash flow, and upcoming debt maturities; the report maintains OW on Longfor.

Asset mapping & comparison

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

• CR Land

  J.P. Morgan's top pick in Mainland China property

  Strengths

  Listed as a top pick, reflecting analyst preference for its fundamentals and risk-reward profile.

  Weaknesses

  The report summary does not provide specific valuation or earnings assumptions.

  Comparison

  Listed alongside CR Mixc and Jinmao as top picks in Mainland China property.

  Risks

  If the sales recovery is not sustained or policy support falls short of expectations, sector valuations may come under pressure.

• CR Mixc

  J.P. Morgan's top pick in Mainland China property

  Strengths

  Included as a top pick and may benefit from the resilience of consumer- and commercial-operations-related assets.

  Weaknesses

  The report does not disclose a standalone rating or target price.

  Comparison

  Positioned together with CR Land and Jinmao as top picks in Mainland China property.

  Risks

  If demand for commercial real estate and property management weakens, market preference may be affected.

• Jinmao

  Top Mainland China property pick and one of last week's outperformers

  Strengths

  Its share price rose 11% last week, making it one of the outperformers in the Mainland China property sector, and it is also listed as a J.P. Morgan top pick.

  Weaknesses

  The report does not provide details of company-level financial forecasts.

  Comparison

  Outperformed peers such as Longfor, Greentown, and Sunac, which rose 8% last week.

  Risks

  After a large short-term gain, it may be affected by profit-taking and volatility in sales data.

• COLI

  Name with improving risk-reward

  Strengths

  J.P. Morgan believes its 2026 sales growth could outperform, and its risk-reward is improving.

  Weaknesses

  The report does not list it as a clear top pick.

  Comparison

  Compared with typical developers, COLI is specifically highlighted as having a potential sales growth advantage.

  Risks

  If the assumption of stronger 2026 sales does not materialize, the improving risk-reward thesis will weaken.

• Longfor

  Credit view maintained at OW

  Strengths

  J.P. Morgan believes its roughly Rmb17bn of available cash and annual positive free cash flow of Rmb5bn-10bn can cover annual debt maturities of Rmb6bn-7bn over the next two years.

  Weaknesses

  Moody's downgraded Longfor from Ba3 to B1/Stable due to elevated leverage and weak development operations.

  Comparison

  Among China high-yield property bonds, Longfor is seen as relatively solid in debt-servicing capability, with curve yields of about 9%-10%.

  Risks

  If weakness in development operations persists, cash flow comes in below expectations, or the refinancing environment deteriorates, the credit view may come under pressure.

• SHKP

  Top pick among Hong Kong developers

  Strengths

  Listed as a top pick among Hong Kong developers, benefiting from improving Hong Kong residential transaction and valuation sentiment.

  Weaknesses

  The report summary does not disclose specific valuation discounts or target prices.

  Comparison

  Listed alongside Sino as a top pick among Hong Kong developers.

  Risks

  If Hong Kong home prices or transaction volumes retreat, valuation recovery for developers may slow.

• Swire Prop

  Top pick among Hong Kong landlords

  Strengths

  Listed as a top pick among Hong Kong landlords and may benefit from improving sentiment in Hong Kong asset prices and leasing markets.

  Weaknesses

  The report does not provide company-level earnings or rental growth data.

  Comparison

  Listed alongside Hang Lung as a top landlord pick.

  Risks

  Adverse retail, office, or interest-rate conditions could weigh on valuations.

Key data

• Registered primary home transactions in 60 Mainland China cities+9% Y/YLast week was -9% Y/Y, with tier-2 cities performing best at +24% Y/Y.
• Year-to-date primary home sales in 20 Mainland China cities-12% Y/YShows cumulative sales are still below the same period last year.
• Registered secondary home transactions in 12 Mainland China cities+18% Y/YLast week was -5% Y/Y; year-to-date secondary home transactions in the 12 cities are flat year over year.
• Secondary transactions in 35 major Hong Kong housing estates76 dealsUp 9% week over week and 49% year over year.
• Hong Kong residential price index-0.01% W/W, +6.6% YTDStill 3.4 percentage points short of J.P. Morgan's full-year forecast of 10%-15% home price growth.
• Centa Valuation Index92.1Was 81.6 last week, the highest since February 2023.
• Centa Salesman Index69.1Was 69.0 last week; above 50 indicates positive market sentiment and possible price increases.
• China high-yield property bond index+0.7% W/W, +3.1% YTDThe JACI China HY Property Index outperformed China HY's +0.4% last week.

Impact & implications

Improving high-frequency sales and valuation indicators help lift near-term risk appetite for property equities and property bonds, especially benefiting developers with stronger sales resilience, relatively healthier balance sheets, or support from recurring income from operating properties. The sharp rise in Hong Kong's CVI suggests upward bank valuation revisions may continue to support home price expectations; however, cumulative primary home sales in Mainland China are still declining, indicating that sector fundamentals have not yet fully recovered.

Risks

• Year-to-date primary home sales in 20 Mainland China cities are still down 12% year over year, showing an uneven recovery in sector demand.
• The secondary asking price index in tier-1 cities is still edging down, indicating the price side has not yet turned comprehensively stronger.
• Longfor was downgraded by Moody's, reflecting that some developers still face pressure from high leverage and weak development operations.
• Hong Kong new home sales may clear inventory through additional low-priced launches, and wider discounts could affect price expectations.
• After the recent rally in property stocks, the sector could pull back if high-frequency sales data weaken.

What to watch

• Whether the year-over-year improvement in secondary home transactions across 12 Mainland China cities can continue and feed through to primary home sales.
• Whether Hong Kong's CVI can remain at high levels and whether upward bank valuation revisions will drive further gains in the CCL.
• The sustainability of secondary transactions in major Hong Kong housing estates and weekend sell-through rates for new projects.
• Changes in southbound fund holdings of Mainland China and Hong Kong property stocks.
• Longfor's coverage of debt maturities over the next two years, free cash flow, and rating changes.
• Whether COLI's 2026 sales growth meets analyst expectations.