China property transactions rebounded in Week 26, with secondary homes showing stronger resilience than primary homes

Overview

This report is Goldman Sachs' weekly tracking of the Chinese real estate sector, focusing on Week 26 transaction volume, inventory, completions, new starts, and developer valuations. On the policy front, Henan and Hainan are advancing urban renewal, affordable rental housing, and inventory destocking. At the market level, both primary- and secondary-home transactions rebounded from pre-festival lows, with secondary homes continuing to outperform primary homes year over year.

Core views

The core view is that the short-term transaction rebound confirms some recovery in demand, but primary homes remain in a year-over-year downtrend while secondary homes are relatively more resilient. Inventory destocking has improved slightly, but absolute inventory months remain high. Developer valuations are close to the lows of historical downcycles, and strong SOE developers offer relatively greater defensiveness.

Analysis framework

The report conducts weekly cross-validation using primary-home transaction area across approximately 75 cities, secondary-home transaction area across approximately 20 cities, the Centaline price expectations indices, city inventory and inventory months, Goldman Sachs' GSPC completion tracker, and NAV, P/B, and target prices for covered developers.

Methodology notes

• Transaction trackingPrimary- and secondary-home GFA transaction tracking

  Using transaction area in city samples to observe sales momentum

  The report uses primary-home transactions across approximately 75 cities and secondary-home transactions across approximately 20 cities as high-frequency indicators, comparing week-over-week, year-over-year, monthly, and year-to-date performance.

• Price expectationsCentaline Salesman Index and Centaline Seller Asking Index

  Price expectation indicators among agents and sellers

  CSI measures intermediaries' views on house-price increases, with readings above 50 representing relatively positive expectations for price increases. CAI measures changes in sellers' asking prices and is used to assess whether price expectations have spread to sellers.

• Inventory analysisInventory balance and inventory months

  Assessment of inventory destocking pressure

  The report tracks inventory balances and 12-month rolling inventory months across approximately 20 cities to assess supply pressure and the pace of destocking.

• Completion forecastGSPC tracker

  Inferring real estate completions based on the float glass supply-demand model

  Goldman Sachs uses a supply-demand model for China's float glass industry and weekly glass demand data to infer changes in real estate completion area.

• Valuation methodsEnd-2026E NAV and 2026E P/B

  Comparing developer share prices with net asset value and price-to-book ratios

  The 12-month target prices for covered developers are primarily based on end-2026E NAV and are compared with NAV discounts and P/B valuations at historical cycle lows.

Asset mapping & comparison

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

• CR Land(1109.HK)

  Covered stock and representative strong SOE developer

  Strengths

  Rated Buy with a target price of HK$36.60; share price declined only 2% during the week, outperforming the average strong SOE developer and the sector.

  Weaknesses

  Still affected by declining primary-home sales, sector valuation pressures, and the slow real estate cycle recovery.

  Comparison

  Performed better than the average strong SOE developer's -6% wow performance; alongside Greentown(3900.HK), it was one of the week's relative outperformers.

  Risks

  Sales recovery below expectations, policy implementation slower than expected, and prolonged valuation discounts.

• Strong SOE developers

  Relatively defensive sector grouping

  Strengths

  Policy support, financing capabilities, and asset quality are generally superior to those of POE developers, while valuations are at low levels.

  Weaknesses

  Average share prices still fell 6% during the week, indicating that sector sentiment has not yet clearly reversed.

  Comparison

  Weekly performance was better than the POE developers' average decline of 7%, but broadly similar to MSCI China.

  Risks

  If the transaction rebound is unsustainable, valuation recovery may be limited.

• POE developers

  High-beta but high-risk real estate developer category

  Strengths

  If sales and financing conditions improve, low valuations could provide significant upside potential.

  Weaknesses

  Average share price declined 7% during the week and 31% YTD, with the market still reflecting relatively high credit and operating pressures.

  Comparison

  Underperformed SOE developers, with weaker valuations and earnings visibility.

  Risks

  Liquidity pressure, declining sales, refinancing constraints, and credit risk.

• China Property Value Chain Index

  Downstream exposure to real estate transactions, new starts, and completions

  Strengths

  Improvement in transactions or completions could benefit related industries such as building materials, home appliances, and home furnishings.

  Weaknesses

  The report indicates that new starts and completions remain weak, suppressing upstream and post-cycle demand.

  Comparison

  Developer valuations are at low levels, but value-chain index performance is divergent.

  Risks

  Continued decline in physical real estate activity, completions below expectations, and insufficient improvement in consumer demand.

Key data

• Week 26 primary-home transactions+38% wow，-17% yoyApproximately 75-city sample; average year-to-date performance was -14% year over year.
• Week 26 secondary-home transactions+27% wow，+6% yoyApproximately 20-city sample; year-to-date performance was broadly flat year over year.
• June 2026 transactionsPrimary homes -11% mom/-12% yoy; secondary homes -6% mom/+9% yoyShows that secondary homes continued to demonstrate stronger year-over-year resilience than primary homes.
• 1H26 transaction comparisonPrimary homes -14% yoy; secondary homes approximately flat yoyPrimary homes were 15%/43% below 2024/2023 levels, respectively, while secondary homes were 18%/10% above 2024/2023 levels, respectively.
• InventoryInventory balance flat wow, -4.8% from end-2025; inventory months 27.3 monthsInventory months were below the May 2026 average of 28.5 months.
• CompletionsApproximately -20% yoy in June 2026; forecast -1% yoy for full-year 2026Based on the GSPC tracker and Goldman Sachs estimates.
• New startsPotential year-over-year decline in the high-twenties percentage range in June 2026Based on 300-city land sales trends and the national cement shipment ratio.
• BEKE GTVExpected +2% yoy in 2Q26Including -23% for new homes and +12% for existing homes.
• Developer share-price performanceStrong SOEs average -6% wow, POEs average -7% wow, other SOEs average -6% wowCR Land(1109.HK, Buy) and Greentown(3900.HK, Buy) both declined 2% wow and outperformed relatively.
• ValuationAverage offshore/onshore covered developers traded at 42%/36% discounts to end-2026E NAV, with 2026E P/B at 0.4x for bothValuations are already close to the lows of several historical downcycles.

Impact & implications

For investors, the short-term transaction rebound and low valuations may help improve sector sentiment, but primary-home sales, completions, and new starts remain weak, making a structural recovery in the industry more likely to manifest through selective opportunities. Strong SOE developers may offer greater defensiveness and valuation-recovery potential than POE developers, owing to their financing capabilities, asset quality, and expected policy benefits.

Risks

• Although primary-home transactions rebounded week over week, they remain down year over year, and demand recovery may be unstable.
• Inventory months remain as high as 27.3 months, and destocking pressure has not been fundamentally resolved.
• Weak completion and new-start indicators in June 2026 may weigh on physical demand across the real estate value chain.
• Sellers' price expectations have not improved in tandem, leaving the foundation for price recovery unstable.
• Low developer valuations may reflect fundamental and credit risks rather than simply undervaluation.

What to watch

• Whether subsequent weekly primary-home transactions can remain above pre-festival levels.
• Whether positive year-over-year growth in secondary-home transactions can continue and whether it will transmit to price expectations.
• The actual pace of implementation of urban renewal, inventory purchases, and affordable rental housing policies in Henan, Hainan, and other regions.
• Whether inventory months continue to decline and approach healthier levels.
• Whether the GSPC tracker, NBS completion data, and new-start data confirm stabilization in physical real estate activity.
• Whether strong SOE developers such as CR Land(1109.HK) and Greentown(3900.HK) can continue to outperform relatively.