China property sales rebounded in Week 20, but leading indicators broadly weakened

Overview

This is a weekly tracking report by Goldman Sachs on China's property development sector, focusing on Week 20 primary and secondary home transactions, inventory, completions, new starts, policy developments, and developer valuations. The core conclusion is that transaction volumes saw a short-term sequential rebound, but multiple leading indicators have broadly pulled back, so further upside in transaction volumes may be limited.

Core views

On the policy front, the central government continues to emphasize urban renewal, while Guangzhou has also introduced supportive measures including high-quality housing construction, conversion of self-held properties into saleable units, and old-for-new housing swaps in Nansha. On the market front, both primary and secondary home transactions rebounded markedly sequentially in Week 20 and posted low double-digit yoy growth; however, primary home searches, secondary home subscriptions and home tours, as well as price expectations from both buyers and sellers, all cooled sequentially. Goldman Sachs therefore remains cautious on sustained short-term transaction improvement. Inventory destocking improved slightly, but inventory months remain close to 29 months; high-frequency indicators for completions and new starts still point to yoy downside pressure. On valuations, developers' P/B ratios and NAV discounts are already at low levels, but share price performance remains notably weaker than the broader market.

Analysis framework

The report uses a high-frequency property data tracking framework, combining weekly primary and secondary home transaction GFA across around 75 cities, search activity, subscriptions and home tours, price expectations, new listing supply, inventory across around 20 cities, as well as Goldman Sachs' GSPC completion tracker and indicators such as land sales/cement shipments, to assess changes in sales, completions, new starts, and valuations. The valuation section uses 2026E NAV discounts and 2026E P/B, and compares them with valuation troughs in past downcycles.

Methodology notes

• High-frequency market trackingWeekly GFA transaction area tracking

  Measure actual transaction activity through primary and secondary home transaction area in major cities.

  The report uses primary and secondary home transaction data from around 75 cities to observe weekly, month-to-date, and year-to-date sequential and yoy changes, as well as changes relative to historical years.

• Leading indicatorsSearch, subscription, home tour, and price expectation indicators

  Use forward-looking demand and expectation changes to judge the sustainability of the transaction rebound.

  Although transaction volumes rebounded in Week 20, primary home search activity declined, secondary home subscriptions and home tours fell, and agents' and homeowners' price increase expectations also weakened, indicating that further upside in transactions may be limited.

• Inventory destockingInventory balance and months of inventory

  Use inventory changes and destocking cycles to measure supply-demand pressure.

  The report tracks inventory balances and inventory months across around 20 cities. In Week 20, inventory balance fell 0.3% wow and inventory months stood at 28.5 months, indicating slight improvement in destocking but still elevated inventory pressure.

• Completion forecastGS Property Completion (GSPC) tracker

  Infer property completion trends using a float glass supply-demand model.

  Based on supply and demand in China's float glass industry and a weekly demand model, the GSPC tracker infers that completion area has fallen by high double digits yoy so far in May 2026, with full-year 2026 down 1% yoy.

• Valuation methodsNAV discount and 2026E P/B

  Use discounts to net asset value and price-to-book ratios to assess developers' valuation positioning.

  The report compares offshore and onshore covered developers' discounts to end-2026 NAV and 2026E P/B, and benchmarks them against troughs seen in the 2008, 2011, and 2014 downcycles.

Asset mapping & comparison

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

• China property developers sector

  Industry research theme

  Strengths

  Transaction volumes rebounded sequentially in Week 20, policy continues to emphasize urban renewal, and valuation metrics are at low levels.

  Weaknesses

  Primary home searches, secondary home subscriptions and home tours, and price expectations all weakened, months of inventory remain high, and completions and new starts are still under pressure.

  Comparison

  Both offshore and onshore covered developers fell 10% on average in Week 20, significantly underperforming MSCI China and CSI 300 at -2%.

  Risks

  The transaction rebound may prove unsustainable, home price expectations may decline, inventory digestion may remain slow, and policy execution may fall short of expectations.

• Strong SOE developers

  Covered sub-sector

  Strengths

  Relative to private developers and other developers, some leading strong SOE developers showed better downside resilience in share price performance.

  Weaknesses

  Average share price still fell 9% in Week 20, indicating the segment as a whole remains dragged by sector pressure.

  Comparison

  COLI (0688.HK) and CRL (1109.HK) fell 3% and 6%, respectively, outperforming the strong SOE average, private developer average, and other SOE average.

  Risks

  A slowdown in sales recovery, persistently low valuations, and policy support insufficient to offset fundamental pressure.

• Private developers

  Covered sub-sector

  Strengths

  If the sales recovery continues, the segment could offer higher elasticity.

  Weaknesses

  Average share price fell 13% in Week 20, underperforming strong SOEs and other SOEs.

  Comparison

  Private developers declined more than strong SOEs at -9% and other SOEs at -9%.

  Risks

  Financing pressure, unstable sales cash collection, weak market confidence, and inventory pressure.

• COLI (0688.HK)

  Covered stock; disclosed rating Buy

  Strengths

  Share price fell 3% in Week 20, relatively outperforming among covered developers.

  Weaknesses

  Still affected by sector pressures from transactions, inventory, and valuations.

  Comparison

  Outperformed the average -9% for strong SOE developers and -10% for offshore coverage.

  Risks

  If the sector transaction rebound cannot be sustained, room for valuation recovery may be limited.

• CRL (1109.HK)

  Covered stock; disclosed rating Buy

  Strengths

  Share price fell 6% in Week 20, showing better downside resilience than most covered developers.

  Weaknesses

  The stock still posted a negative return, reflecting persistently high sector risk premium.

  Comparison

  Outperformed the average -9% for strong SOE developers and -10% for offshore coverage.

  Risks

  If sales, price expectations, and inventory destocking remain weak, valuation recovery could be affected.

• BEKE

  Transaction volume proxy indicator

  Strengths

  GTV rose 5% yoy from April to May-to-date, with secondary home GTV up 9% yoy.

  Weaknesses

  Overall 1Q26 GTV fell 16% yoy, and primary home GTV fell 28% yoy.

  Comparison

  Secondary home performance was significantly stronger than primary homes, consistent with the broader observation that secondary home transactions are more resilient than primary homes.

  Risks

  Weaker secondary home price expectations and declining home tours may pressure subsequent GTV growth.

Key data

• Week 20 primary home sales+21% wow, +11% yoyPrimary home search activity fell 4% wow over the same period, showing a divergence between transactions and forward-looking demand indicators.
• Week 20 secondary home transactions+32% wow, +12% yoyBoth agents' and homeowners' price increase expectations weakened at the margin.
• Median primary home GFA so far in May 2026+3% mom, -10% yoyReflects that month-to-date primary home sales remain below the same period last year.
• Median secondary home GFA so far in May 2026-10% mom, +14% yoySecondary homes outperformed primary homes on a yoy basis, but declined sequentially.
• Average primary home GFA year to date-15% yoy, versus -15%/-50% relative to 2024/2023Primary home sales remain significantly below levels seen in previous years.
• Average secondary home GFA year to date-2% yoy, versus +23%/+5% relative to 2024/2023Secondary homes show notably stronger resilience than primary homes.
• Inventory balance-0.3% wow, -3.4% versus end-2025Inventory balances across around 20 cities declined slightly.
• Months of inventory destocking28.5 monthsBelow the April 2026 average of 29.3 months, but the absolute level remains high.
• Top-100 developers' May contracted salesExpected to be broadly flat yoyAn improvement from April's -10% yoy.
• GSPC completion trackingDown high double digits yoy so far in May 2026; 2026E yoy -1%Inferred from Goldman Sachs' float glass supply-demand model.
• New starts trendExpected down low-twenties yoy so far in May 2026Based on trends in land sales across 300 cities and national cement shipment ratios.
• BEKE GTV1Q26 yoy -16%; April to May-to-date yoy +5%Primary/secondary home segments were 1Q26 yoy -28%/-11% and April to May-to-date yoy -5%/+9%, respectively.
• Covered developers' share price performanceStrong SOEs -9% wow, private developers -13% wow, other SOEs -9% wowCOLI (0688.HK) and CRL (1109.HK) were -3%/-6% wow, respectively, performing relatively better.
• Offshore coverage valuation22% discount to end-2026 NAV, 2026E P/B at 0.6xAverage weekly share prices of offshore covered developers fell 10%, versus a 2% decline in MSCI China over the same period.
• Onshore coverage valuation18% discount to end-2026 NAV, 2026E P/B at 0.5xAverage weekly share prices of onshore covered developers fell 10%, versus a 2% decline in CSI 300 over the same period.

Impact & implications

In the short term, the rebound in transaction volumes helps ease concerns about a further deterioration in demand, but the weakening in leading indicators raises doubts about the sustainability of the rebound. Policy support and urban renewal may improve the medium- to long-term demand structure, but months of inventory remain high, while completions and new starts are still in yoy decline territory, meaning developers' fundamental recovery is not yet firmly established. Valuations are already near or below some historical trough metrics, but share prices continue to lag the broader market, indicating that investors are still waiting for more sustained improvement signals in sales, inventory, and price expectations.

Risks

• Declining primary home search activity may signal that the rebound in subsequent primary home transactions will be hard to sustain.
• Secondary home subscriptions and home tours declined, while agents' and homeowners' price increase expectations weakened.
• Months of inventory destocking remain high, and supply-demand rebalancing still needs time.
• High-frequency indicators for completions and new starts still show yoy downside pressure.
• Policy support still needs to be implemented on the ground, and transmission to transactions and prices may lag.
• Low valuations may become a value trap; if sales and cash flow do not improve, share price recovery may be limited.

What to watch

• Progress in implementing urban renewal policies and Guangzhou's supportive measures.
• The impact of Nansha's Rmb3bn old-for-new housing swap program on primary home transactions.
• Whether primary home search activity, secondary home subscriptions, home tours, and price expectations improve again.
• Weekly and monthly trends in primary and secondary home GFA transactions across around 75 cities.
• Changes in inventory balances and months of inventory destocking across around 20 cities.
• Follow-up validation between the GSPC completion tracker and NBS completion data.
• Implications of land sales across 300 cities and national cement shipments for new starts.
• Whether BEKE's primary and secondary home GTV momentum continues after May.
• Offshore and onshore developers' NAV discounts, 2026E P/B, and share price performance relative to the broader market.