China property transactions and sentiment improved marginally in Week 29, while valuations remain near cyclical lows

Overview

This report tracks China property market activity in Week 29, price sentiment, inventory, completion and new-start expectations, and developer valuations. The core conclusion is that market transactions and sentiment saw marginal improvement: both primary and secondary home transactions recovered sequentially, while secondary-home visits and sellers’ asking-price expectations also improved slightly; however, medium-term fundamentals remain under pressure, especially as year-to-date primary home sales, completions, and new starts remain in a declining range.

Core views

Goldman Sachs believes the marginal improvement in the property market in Week 29 was mainly reflected in transaction volumes, visit volumes, price expectations, and a contraction in new listings. Month-to-date in July, both primary and secondary home transactions turned to slight year-over-year growth, indicating support from a low base and marginal demand; however, year-to-date primary home sales are still down 12% year over year, and completion and new-start indicators continue to signal pressure along the development chain. At the equity level, SOE developers and covered developers significantly outperformed the index, while valuation discounts remain large: covered offshore and onshore developers are trading at average discounts of 34% and 32%, respectively, to end-2026 NAV.

Analysis framework

The report uses cross-validation across high-frequency sales data, secondary-home visit and price-expectation indicators, inventory and months of supply, the GSPC completion tracking model, leading indicators for new starts, developer share-price performance, and P/B and NAV-discount valuations. It also compares primary homes, secondary homes, SOE developers, other developers, and the real estate value chain by segment.

Methodology notes

• High-Frequency Market TrackingPrimary and Secondary Home Transaction Area Tracking

  Uses primary home transactions across about 75 cities and secondary home transactions across about 20 cities to observe week-to-date, month-to-date, and year-to-date changes.

  This method is used to judge whether marginal improvement is emerging on the demand side, and to distinguish sequential momentum, low-base year-over-year effects, and long-term trend pressure.

• Sentiment IndicatorsCSI and CAI

  CSI measures Centaline agents’ views on housing prices, with readings above 50 indicating bullishness; CAI tracks sellers’ listing asking prices.

  The report shows average CSI rose 0.7 percentage points week over week and 4.0 percentage points year over year, while average CAI rose 0.1 percentage points week over week but fell 4.6 percentage points year over year, indicating marginal improvement in price sentiment but not a broad-based recovery.

• Completion ForecastingGSPC tracker

  The GS Property Completion tracker infers completed floor area based on a float-glass supply-demand model and downstream demand.

  The model points to a high double-digit year-over-year decline in completions in July 2026 and forecasts FY2026 completions to fall 15% year over year.

• Valuation ComparisonNAV Discount and P/B Valuation

  Uses discounts to end-2026 NAV and 2026E P/B to measure developer valuation levels.

  Covered offshore developers trade at an average 34% discount to end-2026 NAV and 0.5x 2026E P/B; covered onshore developers trade at an average 32% discount and 0.4x 2026E P/B, near historical trough levels in downcycles.

Asset mapping & comparison

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

• China Property Developer Stocks

  Directly related

  Strengths

  Transactions and sentiment improved marginally, valuations are at low levels, and share prices rebounded in the short term.

  Weaknesses

  Year-to-date primary home sales are still declining year over year, and completions and new starts remain under pressure.

  Comparison

  Secondary homes are performing better than primary homes, and SOE developers are performing better than other developers.

  Risks

  Sales recovery may prove unsustainable, policy support may fall short of expectations, and financing and delivery pressures may recur.

• Stronger SOE Developers

  Higher degree of benefit

  Strengths

  In Week 29, share prices of covered stronger SOE developers rose 7% on average, with CMSK and Poly A outperforming.

  Weaknesses

  Even SOE developers face pressure from industry-wide sales and margin trends.

  Comparison

  Stronger than the 5% average weekly gain for other developers.

  Risks

  If valuation recovery lacks support from realized sales and profits, gains may reverse.

• Other Developers and Private Developers

  Selectively related

  Strengths

  Average share prices rose 5% during the week, offering rebound potential from low valuations.

  Weaknesses

  Credit, liquidity, and sales recovery pressures are usually higher.

  Comparison

  Weaker than stronger SOE developers, and some stocks remain under pressure year to date.

  Risks

  Refinancing difficulties, delivery risks, and market share losses.

• Real Estate Value Chain

  Indirectly affected

  Strengths

  If transaction and completion expectations improve, demand for building materials, home furnishings, and appliances may benefit.

  Weaknesses

  Completion and new-start forecasts in the report remain weak, limiting demand elasticity along the value chain.

  Comparison

  Developer stocks react more directly in the short term, while the value chain needs confirmation from physical demand.

  Risks

  Declining completions, insufficient new starts, and weakening demand along the construction chain.

• BEKE

  Related to trading activity

  Strengths

  Q2 2026 GTV is expected to grow 2% year over year, with existing-home GTV up 12% year over year.

  Weaknesses

  New-home GTV is expected to fall 23% year over year.

  Comparison

  The existing-home chain is clearly stronger than the new-home chain.

  Risks

  If the recovery in secondary-home transactions slows, platform transaction volumes will be affected.

Key data

• Primary Home Transactions+7% wow, +5% yoyWeek 29 primary home transaction area across about 75 cities.
• Secondary Home Transactions+1% wow, +7% yoyWeek 29 secondary home transactions, with marginal improvement in home price appreciation expectations among both agents and sellers.
• Month-to-Date July Primary Home Transactions-9% mom, +6% yoyBased on the median measure.
• Month-to-Date July Secondary Home Transactions-10% mom, +2% yoyBased on the median measure.
• Year-to-Date Primary Home Transactions-12% yoy, versus -13% and -37% relative to 2024 and 2023, respectivelyReflects that long-term demand for primary homes remains weak.
• Year-to-Date Secondary Home Transactions+1% yoy, versus +16% and +12% relative to 2024 and 2023, respectivelySecondary homes are performing significantly better than primary homes.
• New Listing Supply-4% wow8% below the June 2026 average and 19% below July 2025.
• Inventory Balance-0.3% wowMonths of inventory fell to 26.9 months, below the June 2026 average of 27.5 months.
• CSI+0.7 percentage points wow, +4.0 percentage points yoyAgents’ housing price expectations strengthened marginally.
• CAI+0.1 percentage points wow, -4.6 percentage points yoySellers’ listing asking prices edged up sequentially but remained lower year over year.
• Top-100 Developers Sales InferenceJuly 2026 may decline 3% yoyBetter than the 13% year-over-year decline in June 2026.
• Completion ForecastHigh double-digit yoy decline in July 2026, down 15% yoy in FY2026From the GSPC tracker and GSe forecasts.
• New Starts ForecastMid-double-digit yoy decline in July 2026Based on land sales trends in 300 cities and the national cement shipment rate, with cement shipment rate down 2.6 percentage points sequentially to 39%.
• BEKE GTVQ2 2026 may grow 2% yoyNew-home and existing-home GTV were -23% and +12%, respectively.
• Stronger SOE Developers Share Prices+7% wowCMSK rose 10% and Poly A rose 8%.
• Covered Developer ValuationsOffshore/onshore trade at average discounts of 34%/32% to end-2026 NAV, with 2026E P/B at 0.5x/0.4xValuations are at trough levels in the downcycle.

Impact & implications

In the short term, improving transaction momentum, shrinking listings, and recovering price expectations help ease market pessimism and support a phase of rebound in developer stocks, especially for SOE developers with stronger balance sheets. In the medium term, however, year-to-date primary home sales remain weak and completions and new starts continue to decline, indicating that the sector has not yet entered a stable upward recovery cycle. Investment judgments still need to distinguish between high-frequency marginal improvement and underlying fundamental trend pressure.

Risks

• Year-to-date primary home sales are still down year over year, and the marginal improvement may mainly reflect a low base or short-term fluctuations.
• Completions and new starts are expected to continue declining by double digits, reflecting that the development chain has yet to recover.
• Months of inventory remain at a relatively high level, and improvement in price expectations may be fragile.
• After the short-term rally in developer share prices, valuation recovery may be hindered if policy or sales data disappoint.
• Private developers and weaker-credit developers still face financing, delivery, and liquidity risks.

What to watch

• Whether the sequential improvement in primary and secondary home transactions can continue in the coming weeks.
• Whether CSI and CAI continue to rise and stabilize price expectations.
• Whether the contraction in new listing supply translates into inventory digestion and price support.
• Whether the year-over-year decline in July sales of top-100 developers narrows to around 3% as inferred by the report.
• Whether the GSPC tracker, completions, and new-start data confirm that the development chain remains in decline.
• Whether the divergence in share prices and valuations between SOE developers and private developers widens further.