Goldman Sachs: Real estate transaction volume sees mild pullback, but leading indicators signal momentum recovery

Overview

This Goldman Sachs China Real Estate Weekly review covers market performance in Week 19 of 2026. Although registered transaction volumes for both new homes and second-hand properties saw a mild week-over-week decline, several leading indicators (such as new home search volume and second-hand home viewing counts) rebounded significantly, suggesting that market momentum is re-accelerating. On the policy front, local authorities continue to focus on optimizing provident fund loans and providing district-level support. Regarding valuations, stocks of the covered developers rebounded sharply, particularly strong state-owned developers, which currently trade in the historical low range.

Core views

Market transaction data exhibits a pattern of 'volume contraction but stable trend'. In Week 19, the sales area for new homes fell 3% WoW, remaining flat YoY; second-hand transaction volumes fell 4% WoW but surged 23% YoY. Notably, new home search activity increased 4% WoW, while second-hand subscription volumes and viewing counts rebounded 21% and 12% WoW respectively, nearing average levels seen in late April. Improvements in these leading indicators suggest that subsequent transaction volumes may recover. On the policy front, efforts continue to focus on lowering barriers to homeownership and costs. Huihui increased loan limits for individual and family provident funds and relaxed real estate identification standards; Guiyang introduced interest subsidies to narrow the spread between commercial and provident fund loans; Guangzhou Huadu District stimulated local demand by granting school enrollment rights to homebuyers' children and promoting 'trade-in' programs. Fundamental analysis suggests a narrowing of declines in completion and new construction starts. Based on Goldman Sachs' Float Glass Supply-Demand Model Tracker (GSPC), April's completed area is expected to fall approximately 10% YoY, a significant narrowing from the decline in March; new construction area is expected to decline by the mid-teens percentage YoY. Regarding inventory, total monitored city inventory fell marginally 0.2% WoW, with a digestion period of 28.9 months, slightly below the April average of 29.3 months. New listing supply is also decreasing, aiding price stability. Capital markets responded positively with highly attractive valuations. During Week 19, stocks of covered strong state-owned developers rose 15% on average, with China Overseas Land & Investments (COLI) and Jinmao leading the rally at 19%; private developers and other state-owned developers rose 13% and 2%, respectively. Currently, offshore and onshore covered names trade at discounts of 13% and 9% to their 2026E Net Asset Value (NAV), with Price-to-Book (P/B) ratios of 0.6x and 0.5x respectively, far below valuation levels at previous cycle bottoms in 2008, 2011, and 2014.

Analysis framework

The research report employs an analytical framework combining high-frequency data tracking with macro fundamental deduction. First, it captures short-term market sentiment and marginal changes through weekly data on new/home second-hand transaction volumes, search volumes, and viewing counts, emphasizing the guiding role of 'leading indicators' for trend inflection points. Second, it utilizes the unique 'Goldman Sachs Property Completion Tracker (GSPC)', which reversely derives real estate completion progress based on float glass industry supply-demand data and proprietary models, thereby verifying fundamentals more timely rather than relying solely on lagging official statistics. Finally, it combines historical valuation percentiles (compared against past cycle bottoms) to assess the current sector's safety margin and investment value.

Methodology notes

• Industry/Industrial Analysis Framework

  Leading Indicator Analysis Method (Search Volume/Viewing Counts)

  Before official real estate sales data is confirmed, future transaction trends over the coming weeks are predicted by observing buyer search behavior and offline viewing frequencies. This method detects changes in market heat earlier than final signing data.

• Industry/Industrial Analysis Framework

  Upstream Raw Material Reverse Deduction (Float Glass Model)

  Significant amounts of glass are required during the real estate completion phase. By tracking float glass shipment and demand data, one can reverse-engineer the actual completion progress of real estate projects. This is a method to bypass the lag in official statistics and more truthfully reflect industry supply-side conditions.

• Valuation methodsPB valuation

  Price-to-Book (P/B) Ratio Comparison with Historical Cycle Bottoms

  Compare the current P/B ratio of real estate stocks with major historical cycle bottoms (e.g., 2008, 2011, 2014) horizontally to determine if current valuations fully reflect pessimistic expectations, thereby assessing the safety margin.

• Valuation methodsNAV Net Asset Value Method

  Stock Premium/Discount Relative to Expected Net Asset Value (NAV)

  For capital-intensive real estate developers, Net Asset Value (NAV) is the core valuation anchor. The report calculates the discount magnitude of stock prices relative to the expected NAV for end-2026 to measure the extent of undervaluation.

Asset mapping & comparison

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

• China Overseas Land & Investments (0688.HK)

  Representative of strong state-owned developers, benefiting from market recovery and valuation repair

  Strengths

  Weekly report shows its stock gained 19% WoW, outperforming the industry average, receiving a 'Buy' rating

  Comparison

  Tied for best performance with Jinmao

• China Jinmao (0817.HK)

  Representative of strong state-owned developers, benefiting from market recovery and valuation repair

  Strengths

  Weekly report shows its stock gained 19% WoW, receiving a 'Buy' rating

  Comparison

  Tied for best performance with China Overseas Land & Investments

Key data

• New Home Sales Volume WoW Change-3%Week 19 data, flat YoY
• Second-hand Home Sales Volume YoY Change+23%Week 19 data, down 4% WoW
• New Home Search Activity WoW+4%Leading indicator, showing increased interest
• Inventory Digestion Period28.9 monthsSlightly down WoW, below April average of 29.3 months
• Strong State-Owned Developer Stock Weekly Gain+15%Average gain, outperforming the broad market
• Offshore Developer Valuation Discount13%Discount to 2026E NAV, P/B 0.6x

Impact & implications

The research report suggests that although short-term transaction data fluctuates, improvements in leading indicators and continued micro-adjustments in policy indicate that the most difficult period for the market may have passed. For investors, the current sector valuation is at a historically attractive bottom, especially for financially robust strong state-owned developers whose stock price rebounds have been stronger, signaling investor preference for certainty. Improvements in completion data also help alleviate concerns about delivery risks.

What to watch

• Sustainability of new home and second-hand transaction volumes in the following weeks
• Conversion effect of local policies (such as provident funds, subsidies) on actual demand
• Whether completion data continues to narrow its decline as predicted by the GSPC model