Mainland weekly property sales dragged by holiday effects, while Hong Kong home prices rose another 0.6% WoW

Overview

This report is J.P. Morgan's weekly data tracking of the mainland China and Hong Kong property markets, covering real-time secondary transactions, listings, new-home and secondary-home online registrations, leading home price indicators, southbound holdings, share-price performance, and property credit bonds. Overall, apparent transaction volumes in mainland China were clearly disrupted by the Dragon Boat Festival holiday this week and should not be simply interpreted as a deterioration in trend; in Hong Kong, price momentum remains strong, but transaction volumes were dragged by weather and other factors, and analysts expect the pace of price gains to slow in the second half.

Core views

The core views are: mainland property sales data are significantly affected by holidays in the short term, but comparable measures still show some resilience; continued declines in secondary-home listings in tier-1 cities help stabilize secondary-home prices; Hong Kong home prices have already reached the full-year target gain year to date, and subsequent growth may be less than 5%; the credit market remains differentiated, with preference for higher-quality developers or those with a commercial asset transformation story, stronger debt-servicing ability, and reasonable valuations.

Analysis framework

The report uses a high-frequency market monitoring approach, combining the Iceberg Index's real-time transactions and listings, official online registrations, Centaline leading indicators, southbound holdings, share-price performance, and high-yield bond indices to observe changes in transactions, prices, inventory, sentiment, and asset prices in the mainland and Hong Kong property markets. For holiday-week data, the report specifically notes the need to compare with the same holiday period last year to reduce misinterpretation caused by calendar mismatch.

Methodology notes

• High-frequency transaction trackingIceberg Index real-time secondary home transactions in 10 cities

  Real-time secondary transactions lead official online registrations

  The report notes that real-time sales usually lead official sales registrations by several weeks, and therefore can serve as a high-frequency leading indicator for observing trends in secondary-home transactions.

• Inventory and price stabilityIceberg Index secondary-home listings

  Declining listings support price stabilization

  Secondary-home listings in tier-1 cities have fallen 2.6% from the March peak, which the report sees as a key factor supporting continued stabilization in secondary-home prices.

• Market sentiment indicatorsCentaline Manager Confidence Index and Salesman Index

  Broker sentiment reflects home price expectations

  Mainland China's Centaline Manager Confidence Index fell from 53 to 51; Hong Kong's CSI declined from 69.6 to 68.2, but remained above 50, indicating sentiment is still positive and home prices are still biased upward.

• Credit researchJ.P. Morgan credit research rating methodology

  Combining relative value with fundamental credit judgment

  Credit recommendations are based on factors including bond relative value, issuer credit trends, cash flow debt-servicing ability, leverage, interest coverage, liquidity, and asset quality.

Asset mapping & comparison

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

• Mainland property developer equities

  Affected by sales, listings, policy expectations, and sector risk appetite

  Strengths

  On a comparable holiday basis, transactions still showed YoY growth, and continued declines in listings in tier-1 cities are conducive to price stabilization.

  Weaknesses

  Apparent online registrations and transactions fell sharply due to the holiday, and the sector dropped 13% last week, significantly underperforming the Hang Seng Index.

  Comparison

  Sunac fell 5% and relatively outperformed; A-Living fell 20% and Longfor fell 17%, showing weaker performance.

  Risks

  If transactions fail to recover after the holiday disruption, or if downward pressure on prices widens, the sector's valuation recovery may be hindered.

• Hong Kong residential property and property stocks

  Affected by the home price index, secondary transactions, sentiment indicators, and southbound capital flows

  Strengths

  Home prices rose 0.6% WoW and 10.4% YTD, CSI remains above 50, and CVI rose to 86.2.

  Weaknesses

  Transactions in 35 major housing estates fell to 43 units, down 16% WoW and 47% YoY, the lowest level since Lunar New Year.

  Comparison

  The Hong Kong property and conglomerates sector fell 4.4%, slightly outperforming the Hang Seng Index; HKL, Hysan, and JM performed relatively better.

  Risks

  Home prices have reached the full-year target range, and if transaction volumes remain weak or the macro environment softens, gains in the second half could slow markedly.

• China high-yield property bonds

  Affected by issuer liquidity, debt maturities, asset revitalization, and sector differentiation

  Strengths

  The JACI China HY Property Index rose 0.3% last week, with a year-to-date return of 6.4%; Seazen's proposed Rmb2bn private REIT follow-on fundraising could help cover remaining onshore debt maturities.

  Weaknesses

  The sector overall remains weak, with the monthly decline in home prices across 70 cities widening from -0.23% in April to -0.26% in May.

  Comparison

  The report prefers credit names with commercial asset transformation potential, stronger debt-servicing ability, and reasonable valuations, with LNGFOR '29s and SHUION '29s as top picks.

  Risks

  The K-shaped market divergence continues, and lower-tier cities and weaker issuers still face pressure from sales, prices, and refinancing.

Key data

• Iceberg Index real-time secondary home transactions in 10 cities-0.05% YoYPreviously +13% YoY; the apparent decline was mainly due to the Dragon Boat Festival holiday.
• Real-time secondary home transactions in tier-1 cities-3% YoYPreviously +14% YoY; on a same-holiday-week basis, sales in tier-1 cities rose 10% YoY.
• Comparable holiday-basis transactions in 10 cities+15% YoYResult after comparison with the corresponding Dragon Boat Festival week last year.
• Iceberg Index secondary-home listings in 10 cities-0.2% WoWListings in tier-1 cities fell 0.5% WoW, with Shanghai down another 1.1%.
• Tier-1 city secondary-home listings versus March peak-2.6%The report believes that continued declines in listings support secondary-home price stability.
• New-home online registrations in 60 cities-23% YoYMainly because the statistical period included three days of the Dragon Boat Festival holiday, during which online registrations were significantly lower than usual.
• Secondary-home online registrations in 12 cities-13% YoYEnding the previous streak of nine consecutive weeks of positive YoY growth; Shanghai was the only tier-1 city with YoY growth, up 12%.
• Year-to-date secondary-home online registrations in 12 cities+5% YoYShanghai is up 13% YoY year to date.
• Hong Kong residential price index+0.6% WoW, +10.4% YTDThe year-to-date gain has already reached J.P. Morgan's full-year target range of 10%-15%.
• Secondary-home transactions in 35 major Hong Kong housing estates43 units, -16% WoW, -47% YoYThe lowest level since Lunar New Year, partly affected by severe weather.
• Hong Kong Centa Salesman Index68.2Down from 69.6 last week, but still above 50, indicating positive sentiment.
• Hong Kong Centaline Valuation Index86.2Rose from 82.7 last week to 86.2.
• Mainland property sector share prices-13% weeklyUnderperformed the Hang Seng Index's -5%; Sunac performed relatively better at -5%.
• Hong Kong property and conglomerates sector share prices-4.4% weeklySlightly outperformed the Hang Seng Index's -4.7%; HKL performed best with a decline of about 1%.
• JACI China HY Property Index+0.3% weekly, +6.4% YTDResumed its upward move last week, outperforming China HY's +0.16%.
• Seazen private REIT follow-on fundraising planRmb2bnThe planned fundraising size exceeds the remaining onshore debt due in 2026 of Rmb1.7bn.

Impact & implications

In terms of investment implications, the report does not recommend judging that mainland property demand has deteriorated again solely based on the YoY decline in sales during the holiday week, and instead emphasizes the support from comparable holiday measures and falling listings for price stability. In Hong Kong, prices have already quickly reached the full-year target, so more attention should now be paid to whether transaction volume, sentiment indicators, and the interest rate environment can support further gains. On the credit side, the report stresses that sector differentiation will continue, with priority given to issuers with asset revitalization potential, debt-servicing capability, and valuation support.

Risks

• High-frequency transaction data may be temporarily distorted by the Dragon Boat Festival holiday and severe weather, and trend judgments may be misleading if comparable adjustments are not made.
• The widening monthly decline in home prices across 70 mainland cities indicates the broader market remains weak.
• Hong Kong home prices are close to or have reached the full-year target, and further upside may narrow.
• Property stocks and high-yield bonds remain affected by policy, sales recovery, financing conditions, and fluctuations in risk appetite.
• Some company disclosures involve investment banking business, market making, client relationships, or potential compensation arrangements, and investors should make prudent judgments in light of conflict-of-interest disclosures.

What to watch

• Whether real-time secondary-home transactions in 10 mainland cities and tier-1 cities recover after the holiday.
• Whether secondary-home listings in tier-1 cities continue to decline, and whether this feeds through to home price stabilization.
• The YoY trend in new-home online registrations in 60 cities and secondary-home online registrations in 12 cities during non-holiday weeks.
• Whether Hong Kong CSI, CVI, and transaction volumes in 35 major housing estates can support continued home price increases.
• Progress of Seazen's private REIT follow-on fundraising and subsequent public REIT plans.
• Changes in yields and relative value for the JACI China HY Property Index, LNGFOR '29s, and SHUION '29s.