New home transactions down 22% sequentially; Beijing's new policy may struggle to alter weak recovery

Overview

This Goldman Sachs China Real Estate Weekly Tracking Report (Week 32) reviews the latest high-frequency data on new and secondary home transaction volumes, inventory, and price expectations, and comments on Beijing's newly introduced real estate easing policies. The core judgment is: transaction volumes have weakened sequentially, leading indicators are trending moderately lower, and the market remains in a state of weak recovery. However, valuations are close to historical bottoms, and Beijing's new round of easing policies constitute a marginal positive factor. Among these, strong state-owned enterprise developers like Greentown and Jinmao have shown relatively bright performance.

Core views

Week 32 transactions showed a pattern of 'stable prices but declining volume'. New home transaction area dropped significantly by 22% sequentially, down only 1% year-on-year, and cumulatively down 11% year-to-date, which is 17% and 38% lower than the same periods in 2024 and 2023, respectively. Secondary home transactions were down 15% sequentially and 3% year-on-year, but remained up 1% year-on-year year-to-date, which is 14%/13% higher than the same periods in 2024/2023, indicating that the secondary home market has significantly better resilience than the new home market. Leading indicators signal a moderate cooling of demand. The report specifically notes: new home search activity decreased by 0.9% sequentially, secondary home subscriptions (leading signed sales by 1-2 weeks) decreased by 3% sequentially, and both agents' and sellers' price increase expectations declined. However, secondary home visit volumes, new listings, and transaction prices basically maintained the previous week's levels, indicating that the market has not deteriorated significantly, but momentum has weakened. Inventory is slowly digesting but remains under high pressure. Overall inventory area decreased by 0.4% sequentially, cumulatively down 6.8% from the end of 2025; the digestion cycle calculated based on 12-month rolling sales reached 27.4 months, basically flat compared to the June and July averages of 27.5/27.1 months. Goldman Sachs uses its completion tracking model (GSPC) to predict that national completion area in July will see a year-on-year decline of roughly ten-plus percentage points (narrowing from the -25% YoY decline predicted by NBS/Goldman Sachs in June), and for the full year, it expects a YoY decline of 15%. Meanwhile, it predicts that July new starts will see a year-on-year decline in the mid-teens percentage range, based on land transaction trends in 300 cities and national cement shipment rates (up 0.3 percentage points sequentially to 42.5%). On the policy front, Beijing introduced a new round of easing package on August 7, including shortening the social security/tax payment years required for non-resident buyers within the Fifth Ring Road, canceling purchase qualification checks when parents gift properties to children, and significantly increasing provident fund loan limits. This is a marginal addition following previous rounds of loosening, reflecting that first-tier cities are still gradually releasing housing purchase demand. From an individual stock perspective, the average weekly gain for strong state-owned enterprise developers covered by Goldman Sachs was 2%, with Greentown China (3900.HK, Buy) and Jinmao (0817.HK, Buy) leading with gains of 5% and 4%, respectively; other developers averaged a weekly decline of 2%. In terms of valuation, offshore covered targets average a 36% discount to end-of-2026 NAV, corresponding to a 2026E P/B ratio of 0.5x, remaining low compared to historical bottoms (discount rates during troughs in H2 2008, H2 2011, and H1 2014 were 39%/73%/58%, with P/B ratios of 0.7/0.9/0.9x). The report also mentions that Beike's total transaction volume for new homes + secondary homes in Q2 may be up 5% year-on-year (new homes -23%, secondary homes +17%), reflecting the benefit to intermediary platforms from the recovery in the secondary home market.

Analysis framework

This weekly report adopts the typical real estate research framework of 'high-frequency data tracking + leading indicator verification + valuation anchoring'. Goldman Sachs first observes transaction volumes from sequential and year-on-year perspectives to distinguish between seasonal fluctuations and trend changes; then uses soft indicators such as new home search volume, secondary home subscription volume (a leading indicator 1-2 weeks before signing), and price expectations from intermediaries and sellers to judge whether demand momentum is turning weak. Completions and new starts use proprietary models (GSPC常态化 tracker, relying on float glass supply-demand models and cement shipment rates) for forward-looking predictions. Finally, it uses NAV discount rates and P/B ratios relative to historical bottoms to judge whether sector valuations have fully priced in pessimistic expectations.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply and Demand Framework

  High-Frequency Supply and Demand Tracking

  By analyzing supply and demand indicators such as new/secondary home transaction areas, inventory, and digestion cycles, to judge the short-term quantity-price relationship and destocking pressure in the real estate market.

• Industry/Industrial Analysis FrameworkQuantity-Price Split

  Splitting Transaction Volume and Price Expectations

  Separating 'quantity' (transaction area, search volume, subscription volume) from 'price' (transaction price, intermediary/seller price increase expectations) to analyze whether the market is experiencing stable prices with declining volume or a simultaneous decline in both.

• Cycle and Prosperity FrameworkProsperity Inflection Point Analysis

  Identifying Prosperity Inflection Points with Leading Indicators

  Using leading indicators such as secondary home subscriptions (leading signed sales by 1-2 weeks), search activity, and price expectations to identify the direction of inflection points in transaction volume in advance, a common practice in high-frequency prosperity tracking.

• Valuation MethodP/NAV Resource Real Estate Valuation

  Comparing NAV Discount Rate with Historical Bottoms

  Using the discount rate of stock price relative to Net Asset Value (NAV), and the Price-to-Book (P/B) ratio, comparing horizontally with valuation levels during cycle troughs in 2008, 2011, and 2014 to determine if current developer stocks are in a historically bottom valuation range.

• Company Fundamentals and Financial Framework

  GSPC Completion/New Starts Goldman Sachs Proprietary Forecast Model

  Goldman Sachs deduces national completion area using float glass supply-demand models and predicts new starts using indicators such as cement shipment rates, a unique method for cross-industry data verification of real estate starts/completions.

Asset mapping & comparison

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

• Greentown China Holdings Limited (3900.HK)

  A mixed-ownership developer covered by Goldman Sachs with a Buy rating; share price rose 5% in Week 32, leading among strong SOE developers.

  Strengths

  Stable operations, strong product quality, supported by policy improvement expectations.

  Comparison

  Outperformed the average weekly gain of +2% for covered SOE developers, as well as the average -2% for other developers.

• Jinmao Holdings Limited (0817.HK)

  A central state-owned enterprise developer covered by Goldman Sachs with a Buy rating; share price rose 4% in Week 32, ranking high.

  Strengths

  Central SOE background, obvious financing advantages.

  Comparison

  Second only to Greentown, outperforming the average level of SOE developers, and significantly better than other developers overall.

• KE Holdings Inc. (BEKE)

  Goldman Sachs expects Beike's total transaction volume for new homes + secondary homes in Q2 to be up 5% YoY, with secondary homes +17% providing support.

  Strengths

  Benefiting from the resilience of the secondary home market, intermediary platform transactions continue to recover.

  Weaknesses

  New home-related business is down 23% YoY, still dragged down by the new home market.

Key data

• New Home Transaction Area Weekly Sequential Change-22%Significant weakness in Week 32 sequentially, down 1% YoY, YTD -11% which is 38% lower than 2023
• Secondary Home Transaction Area Weekly Sequential Change-15%Down 3% YoY, up 1% YTD, showing significantly better resilience than new homes
• New Home Search Activity Sequential Change-0.9%Consistent with leading performance of weakening transaction volume
• Inventory Sequential Change-0.4%Cumulative -6.8% from end of 2025, absolute value -0.4% sequentially
• Digestion Cycle27.4 monthsBasically flat with June/July averages of 27.5/27.1
• July Completion Year-on-Year ExpectationDecline of more than ten percentage pointsGSPC model, improvement from June's -25% YoY
• 2026 Full Year Completion Year-on-Year Forecast-15%Goldman Sachs full-year forecast
• July New Starts Year-on-Year ForecastDecline in the mid-teens percentage rangeBased on 300-city land and cement shipment rates; June was -26%
• Offshore Covered Valuation Relative to 2026E NAVDiscount of 36%2026E Net Asset Value discount rate; historical trough discounts can reach 39%-73%
• Covered Targets 2026E Price-to-Book Ratio0.5xBoth offshore and onshore covered targets are approximately 0.5x

Impact & implications

The core implication conveyed by the report is: market transaction volumes are shifting from a previous moderate recovery to a sequential decline, especially in the new home segment, while the secondary home segment retains resilience, indicating that replacement and improvement demands provide certain support to the market. Leading indicators (searches, subscriptions, price expectations) are cooling simultaneously, suggesting that transaction volumes may continue to remain weak in the short term. However, inventory digestion is ongoing, completion declines are narrowing, and continuous easing policies in first-tier cities like Beijing help alleviate demand pressure marginally. For individual stocks, capital favors strong state-owned enterprise developers with stable operations and significant valuation discounts (Greentown, Jinmao), which show relative advantages in the current weak environment; other developers continue to face pressure. Overall valuations are at historical bottoms, and Goldman Sachs believes negative expectations have been fairly well priced in, but the conclusion remains data-driven and cautiously neutral, without shifting to a broadly bullish stance.

What to watch

• Whether Beijing's new policy can drive a recovery in purchase demand within the Fifth Ring Road after implementation
• Whether leading indicators such as secondary home subscription volume and search activity will continue to weaken
• Whether new home transaction volumes will decline further sequentially
• Whether the digestion cycle can further decrease to alleviate inventory pressure