China residential property market Report Interpretation

Overview

This China housing-market update assesses August price trends across the NBS 70-city dataset. Goldman Sachs concludes that primary-market weakness moderated and Tier-1 momentum improved, but resale-market declines, softer transaction volumes and rising inventories continue to indicate an uneven recovery.

Core views

The report finds that the seasonally adjusted, population-weighted 70-city primary-market price decline narrowed to 0.4% month-on-month annualized in August from 0.9% in July. The year-on-year decline also narrowed to 3.0% from 3.2%. Goldman Sachs notes that Shanghai and Hangzhou continued to record year-on-year gains of 3.0% and 2.2%, respectively. It cautions that new-home prices are typically less volatile because local governments manage prices, so the primary-market data should not be read as a complete view of housing-market conditions. City-tier trends were divergent. Tier-1 home prices rose 2.4% month-on-month annualized in August, accelerating from 1.3% in July, with Beijing leading the gains. Tier-2 prices declined 0.2%, after being flat in July, while the Tier-3 decline narrowed to 1.9% from 2.8%. Goldman Sachs continues to expect broad Tier-1 and Tier-2 housing-price stabilization within the next one to two years, likely led by Shenzhen and Shanghai. However, it judges that policies extending mortgage maturities from 30 to 40 years may assist liquidity-constrained buyers without meaningfully increasing overall demand. Secondary-market conditions remained weaker despite some sequential improvement. The weighted-average resale-home price decline narrowed to 1.5% month-on-month annualized from 2.0% in July, while the year-on-year decline narrowed to 4.8% from 5.1%. NBS data and selected third-party platforms indicate secondary-market price falls of 5-8% over the past year. The report also observes that the share of cities recording sequential price increases fell in both primary and secondary markets during August. Demand and inventory indicators provide a more cautious backdrop. Goldman Sachs’ high-frequency tracker showed 30-city new-home transaction volume somewhat below year-ago levels in early September. Major-city inventory months rose slightly to 27.2 in August from 27.1 in July, with Tier-1 cities accounting for most of the increase. The inventory measure is sellable gross floor area divided by rolling 12-month gross floor area sold, linking higher readings to a larger stock of homes relative to recent sales.

Analysis framework

Goldman Sachs uses NBS 70-city primary- and secondary-market price data, calculating population-weighted averages and applying its own seasonal adjustments to sequential changes. It then compares price trends by city tier, supplements the official data with selected third-party resale-price series, and assesses near-term conditions through a high-frequency 30-city transaction tracker and an inventory-months measure.

Methodology notes

• Industry AnalysisSupply-demand framework

  Housing demand and inventory assessment

  The report combines new-home transaction volumes with months of sellable inventory to assess whether market demand is sufficient to absorb available housing supply.

• Other

  Population-weighted, seasonally adjusted 70-city price tracking

  Goldman Sachs weights city price changes by population rather than using simple averages and seasonally adjusts sequential movements to compare monthly momentum.

Key data

• Primary-market price change-0.4% month-on-month annualized; -3.0% year on yearAugust, seasonally adjusted by Goldman Sachs; compared with -0.9% month-on-month annualized and -3.2% year on year in July.
• Secondary-market price change-1.5% month-on-month annualized; -4.8% year on yearAugust, seasonally adjusted by Goldman Sachs; compared with -2.0% and -5.1%, respectively, in July.
• Tier-1 price change2.4% month-on-month annualizedAugust, accelerating from 1.3% in July; Beijing led the gains.
• Tier-2 price change-0.2% month-on-month annualizedAugust, versus flat sequential growth in July.
• Tier-3 price change-1.9% month-on-month annualizedAugust, with the decline narrowing from -2.8% in July.
• Major-city inventory months27.2 monthsAugust, up from 27.1 in July; the increase was mostly led by Tier-1 cities.

Impact & implications

The report interprets the August data as evidence of a lessening primary-market downturn and improving Tier-1 momentum, but not a broad demand rebound. Continued resale-price weakness, softer transaction volumes and rising inventories temper the stabilization outlook, while longer mortgage maturities are not expected to materially lift demand.