China Property Week 22: New Home Sales Continue to Advance, Guangzhou Implements a Citywide Housing Buyback Policy

Overview

This is Goldman Sachs' Week 22 weekly report on China's real estate sector, focusing on new and existing home transactions, inventory, Guangzhou's policy easing, high-frequency indicators for completions and new starts, and developer valuations. The report shows that new home transactions continued to rise sequentially and were close to flat year over year in May, existing home transactions remained strongly positive year over year, and inventory improved slightly; however, year-to-date new home transactions remained well below 2024 and 2023 levels, and the real estate construction chain continued to face pressure.

Core views

The report's core view is that short-term transaction data have improved at the margin, especially for new home sales and year-over-year existing home data; Guangzhou's citywide housing buyback and optimization of commercial-mortgage-to-housing-fund loan conversion should help improve the upgrading chain and residents' homebuying capacity; inventory indicators continue to destock slowly; however, year-to-date new home sales are still down 14% year over year, while completions and new starts remain in negative year-over-year territory, indicating that the sector has not yet entered a strong recovery. On valuation, covered developers' share prices have performed relatively well versus the broader market, and both NAV discounts and P/B are at low levels, but valuation recovery still depends on continued validation from sales, policy, and earnings expectations.

Analysis framework

Goldman Sachs uses weekly high-frequency sales data, city inventory indicators, existing home listings and price expectations, BEKE gross transaction value, land sales and cement shipments, float glass demand models, and comparisons of NAV discounts and P/B multiples to cross-validate real estate demand, supply chain conditions, and stock market performance. The report also compares share price performance across groups of strong central/local SOE developers, private developers, and other SOE developers, using MSCI China and CSI300 as relative performance benchmarks.

Methodology notes

• Industry high-frequency trackingGSPC tracker

  Infer property completions using a float glass supply-demand model

  The GSPC tracker infers trends in real estate completion area based on the outlook for China's float glass industry and Goldman Sachs' proprietary weekly float glass demand model; in this issue it suggests that May 2026 completions may decline by a high double-digit rate year over year, with a full-year 2026 decline of 1% expected.

• Transaction and inventory trackingWeekly property transaction and inventory monitoring

  Use new homes, existing homes, inventory months, and price expectations to gauge market conditions

  The report tracks new home transaction volume, existing home transaction volume, search and viewing activity, new listings, average transaction prices, inventory balance, and months of inventory to assess demand recovery, inventory pressure, and changes in price expectations.

• Valuation methodsNAV discount and P/B comparison

  Use target NAV and price-to-book to assess low developer valuations

  The report compares the discount of covered developers' current share prices to estimated end-2026 NAV and their 2026E P/B multiples with trough valuations seen in 2H08, 2H11, and 1H14.

• Equity factorGS Factor Profile

  Growth, financial returns, valuation multiples, and composite factors

  Goldman Sachs' factor framework compares stocks' characteristics versus the market and sector peers across growth, financial returns, valuation multiples, and composite indicators, with the composite metric built from growth, financial returns, and value characteristics.

• M&A probabilityM&A Rank

  Assess acquisition probability on a 1-to-3 scale

  Goldman Sachs discloses that its M&A framework classifies a company's potential acquisition probability into three levels, from 1 to 3, where 1 indicates a higher probability, 2 a medium probability, and 3 a lower probability; if rated 1 or 2, the target price may include an M&A component.

• Data platformQuantum

  Goldman Sachs proprietary financial database

  Quantum is Goldman Sachs' proprietary database that provides historical financial statements, forecasts, and ratios for deep single-company analysis or cross-sector and cross-market comparisons.

Asset mapping & comparison

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

• Chinese real estate developer equities

  The report tracks developer share prices, NAV discounts, and P/B valuation, making this the primary equity asset mapping.

  Strengths

  Strong central/local SOE developers rose 2% on average in Week 22, while Jinmao (0817.HK, Buy) and CMSK (O01979.SZ, Neutral) both rose about 5%; both offshore and onshore covered developers outperformed their respective benchmark indices.

  Weaknesses

  Sector sales have not fully recovered, with year-to-date new home transactions still down 14% year over year, while completions and new starts remain in decline.

  Comparison

  Offshore coverage trades at an average 24% discount to 2026E NAV and 0.6x P/B; onshore coverage trades at an average 20% discount and 0.5x P/B. Over the same period, MSCI China and CSI300 both fell about 2%.

  Risks

  If sales recovery slows, NAV expectations are revised downward, or financing conditions or policy execution fall short of expectations, low valuations may persist.

• China's new home market

  New home sales are a key indicator in the report for assessing property demand and developer cash flow.

  Strengths

  In Week 22, new home sales volume rose 13% week over week and 4% year over year, while median transaction area in May rose 5% month over month and was flat year over year.

  Weaknesses

  Average year-to-date new home transaction area fell 14% year over year, 15% below 2024 and 47% below 2023.

  Comparison

  New homes improved sequentially in the short term, but year-to-date performance remains weaker than that of existing homes.

  Risks

  Search activity was broadly flat week over week; if homebuying intentions fail to improve further, the rebound in transactions may lack sustainability.

• China's existing home market

  Existing home transactions, viewings, listings, and price expectations are used to observe liquidity in the secondary housing market and residents' upgrading intentions.

  Strengths

  Existing home transactions rose 26% year over year in Week 22, and May transaction area rose 20% year over year; BEKE's existing home gross transaction value is expected to rise 16% year over year from April to May.

  Weaknesses

  Existing home transactions fell 2% week over week in Week 22, and sellers' price increase expectations eased slightly.

  Comparison

  Year-to-date existing home transaction area is flat year over year and 23% and 7% above 2024 and 2023, respectively, clearly outperforming new homes.

  Risks

  If listings increase or sellers' expectations weaken, existing home prices and average transaction prices may come under pressure.

• Guangzhou housing market

  Guangzhou policy is a key policy case in the report, used to assess local easing and trade-in mechanisms.

  Strengths

  Guangzhou launched a citywide housing buyback plan and optimized the channel for converting commercial mortgages into housing fund loans, raising the maximum post-conversion housing fund loan LTV to 80% and expanding eligibility to owners of multiple homes, prior housing fund loan users, and contributors in the Greater Bay Area or Guangzhou metropolitan area.

  Weaknesses

  The buyback targets are concentrated on units in central urban areas priced below RMB 3 million and under 70 square meters, so the policy's coverage and actual scale still need to be observed.

  Comparison

  The report says the buyback plan resembles the Shanghai model and represents an expansion from the earlier Nansha pilot to the whole city.

  Risks

  There is uncertainty around execution speed, sources of acquisition funding, the efficiency of converting units into social housing and talent housing, and the policy's ability to stimulate market-based transactions.

• Real estate post-cycle and building materials chain

  Completions, new starts, glass, and cement indicators reflect the construction chain and post-cycle demand.

  Strengths

  The GSPC model provides a high-frequency cross-check for completions, helping anticipate changes in official data.

  Weaknesses

  Completions in May 2026 are expected to decline by a high double-digit rate year over year, while new starts are expected to decline by a low twenty-percent rate, indicating that the construction chain remains under pressure.

  Comparison

  The report compares GSPC with NBS and Goldman Sachs estimates; in April, NBS completions were -19% year over year, while Goldman Sachs estimated a decline of about 10%.

  Risks

  If completions and new starts continue to decline, this may drag on post-property demand for building materials, home renovation, home appliances, and furnishings.

Key data

• Week 22 new home sales volume+13% WoW, +4% YoYNew home search activity was broadly flat week over week.
• Week 22 existing home transactions-2% WoW, +26% YoYAgents' price increase expectations held steady, but sellers' price increase expectations eased slightly.
• Median new home transaction area in May 2026+5% MoM, flat YoYThis shows that May new home sales improved from the previous month, but had not yet posted clear year-over-year growth.
• Median existing home transaction area in May 2026-7% MoM, +20% YoYExisting homes continued to outperform new homes on a year-over-year basis.
• Average year-to-date new home transaction area-14% YoY, 15% below 2024, 47% below 2023The medium-term recovery in the new home market remains insufficient.
• Average year-to-date existing home transaction areaFlat YoY, 23% above 2024, 7% above 2023The resilience of the existing home market is clearly stronger than that of the new home market.
• Inventory balance-0.5% WoW, 4.4% below year-end 2025Inventory in about 20 cities continued to decline gradually.
• Months of inventory27.6 monthsBelow the April 2026 average of 29.3 months, though the absolute level remains high.
• GSPC completion trackerHigh double-digit YoY decline in May 2026; full-year 2026 expected at -1% YoYInferred from a float glass supply-demand model.
• New startsMay 2026 expected to decline by a low twenty-percent rate YoYBased on trends in land sales across 300 cities and nationwide cement shipment ratios.
• BEKE gross transaction valueCombined new home and existing home transactions in April to May 2026 expected to grow 9% YoYOf this, new homes are down 6% YoY and existing homes are up 16% YoY.
• Weekly share price performance of covered developersStrong central/local SOE developers averaged +2% WoW; both offshore and onshore coverage averaged about +1% WoWOver the same period, both MSCI China and CSI300 were down about 2%.
• Developer valuationOffshore coverage trades at a 24% discount to 2026E NAV and 2026E P/B of 0.6x; onshore coverage trades at a 20% discount and P/B of 0.5xThe report compares these with troughs from past downcycles.

Impact & implications

For investors, this week's data support the view that the real estate transaction chain is improving in the short term and that policy support is taking effect, especially as Guangzhou's housing buyback and housing fund policy optimization may improve upgrading demand and homebuying eligibility constraints. For equities, strong central/local SOE developers have outperformed and valuations are at low levels, offering elasticity to policy and sales recovery; however, fundamentals have not fully turned around, as year-to-date new home sales, completions, and new starts still point to sector pressure, meaning valuation recovery requires more evidence from monthly transactions, inventory destocking, and price stabilization.

Risks

• New home sales have improved in the short term but remain significantly negative year to date, so the sector recovery may be unstable.
• Sellers' price increase expectations in the existing home market have eased slightly, and more evidence is still needed to confirm price stabilization.
• Months of inventory remain at 27.6 months, so absolute inventory pressure is still not low.
• Completions and new starts are expected to continue declining year over year, leaving the construction chain and real estate post-cycle demand under pressure.
• There is uncertainty around the execution scale and stimulative effect of local policies such as housing buybacks and housing fund loan optimization.
• Although developer valuations are low, valuation recovery may be delayed if sales, earnings, or NAV expectations are revised downward.
• There may be methodology differences between high-frequency trackers and model estimates versus official statistics.

What to watch

• The actual acquisition scale, housing standards, and progress in conversion into social housing or talent housing under Guangzhou's citywide housing buyback plan.
• Following the optimization of commercial-mortgage-to-housing-fund loan conversion policy, the extent of residents' loan conversion and release of upgrading demand.
• Whether weekly new home transactions can continue the sequential improvement seen in Week 22.
• Whether existing home viewings, new listings, average transaction prices, and sellers' price increase expectations continue to improve.
• Whether inventory balance and months of inventory can continue to decline.
• Whether NBS May data on completions and new starts are consistent with GSPC tracker forecasts.
• Whether share price divergence widens among strong central/local SOE developers, private developers, and other SOE developers.
• Whether offshore and onshore developers' NAV discounts and 2026E P/B recover from low levels.