China real estate Week 29 transactions and sentiment improved marginally, but primary sales and completions remain in a downcycle

Overview

This report is Goldman Sachs’ weekly tracking of market activity and sentiment in China real estate during Week 29. The key conclusion is that transaction activity and sentiment improved marginally from the previous week: both primary and secondary transactions increased sequentially, and year-over-year performance for July to date also improved. Meanwhile, inventory continued to decline slightly and expectations for price increases strengthened modestly. However, on a year-to-date basis, primary transactions remain down year over year, while completions and new starts also remain on a downward trend, indicating that the foundation for an industry recovery is not yet solid.

Core views

The report’s core views include: First, primary transaction floor area increased 7% sequentially and 5% year over year in Week 29, but the year-to-date average remains down 12% year over year and 13% and 37% below 2024 and 2023, respectively. Second, secondary transactions were more resilient, increasing 7% year over year in Week 29 and 1% year to date, and remaining above the same-period levels in 2024 and 2023. Third, price expectations improved marginally, with both the broker price expectations index and seller asking expectations increasing. Fourth, inventory destocking continued to improve, but inventory remains close to 27 months, a high absolute level. Fifth, developer stock valuations remain low: offshore and onshore covered names trade at 34% and 32% discounts to forecast end-2026 NAV, respectively, corresponding to 2026E P/B multiples of 0.5x and 0.4x.

Analysis framework

The report uses a high-frequency weekly tracking framework, monitoring primary transactions, secondary transactions, search activity, property-viewing/broker expectations, seller asking expectations, inventory, the completion tracker, and developer stock valuations within a single framework. For its completion assessment, the report uses the Goldman Sachs GSPC tracker, which infers changes in real estate completion floor area based on a flat-glass supply and demand model.

Methodology notes

• High-frequency market trackingPrimary and secondary transaction floor area tracking

  Observe changes in real estate demand through primary transactions in approximately 75 cities and secondary transactions in approximately 20 cities.

  Primary transactions reflect new-home sales and developers’ destocking, while secondary transactions reflect liquidity in the existing-home market. Together, they are used to assess whether demand has improved marginally.

• Sentiment indicatorsCentaline Salesman Index and Centaline Seller Asking Index

  CSI reflects brokers’ views on housing prices, while CAI reflects sellers’ asking-price expectations.

  The report notes that a CSI above 50 indicates a positive view toward housing price increases, while CAI is used to monitor changes in sellers’ asking prices; both indicators improved marginally this week.

• Completion forecastGS Property Completion Tracker

  Use a flat-glass supply and demand model to infer changes in real estate completion floor area.

  GSPC indicates that completions in July 2026 may decline by a high-teens percentage year over year, while FY26E completions are expected to decline 15% year over year, indicating continued pressure on the construction and delivery chain.

• Valuation comparisonP/B and NAV discount comparison

  Compare developers’ current P/B multiples and discounts to forecast NAV with trough levels in historical downcycles.

  The report notes that offshore covered developers trade at an average 34% discount to forecast end-2026 NAV with 2026E P/B of 0.5x, while onshore covered developers trade at an average 32% discount with 2026E P/B of 0.4x.

Asset mapping & comparison

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

• CMSK (001979.SZ)

  Covered name, strong SOE developer

  Strengths

  Share price rose 10% in Week 29, outperforming the average for strong SOE developers; rated Neutral.

  Weaknesses

  Share price remains negative year to date, while primary sales and completions in the sector remain under pressure.

  Comparison

  Strong SOE developers rose 7% on average in Week 29, and CMSK performed better.

  Risks

  Unsustained improvement in property transactions, weaker-than-expected policy impact, and a reversal in valuation recovery.

• Poly A (600048.SS)

  Covered name, central SOE developer

  Strengths

  Share price rose 8% in Week 29, outperforming the average for strong SOE developers; rated Neutral.

  Weaknesses

  Share price remains negative year to date, while sector inventory months remain high.

  Comparison

  Strong SOE developers rose 7% on average in Week 29, and Poly A was slightly above average.

  Risks

  Sales recovery slower than expected, continued declines in completions and new starts, and declining risk appetite for the A-share property sector.

• China offshore property developers

  Industry covered asset

  Strengths

  Rose 6% on average in Week 29, outperforming the flat performance of MSCI China; valued at a 34% discount to forecast end-2026 NAV.

  Weaknesses

  Industry credit and sales fundamentals remain under pressure.

  Comparison

  2026E P/B is 0.5x, close to the low end of historical downcycles.

  Risks

  Financing conditions, sales collections, debt refinancing, and policy uncertainty.

• China onshore property developers

  Industry covered asset

  Strengths

  Rose 7% on average in Week 29, outperforming the CSI300’s -2%.

  Weaknesses

  Primary transactions remain down 12% year over year year to date, and inventory months remain high.

  Comparison

  2026E P/B is 0.4x, with a 32% discount to forecast end-2026 NAV.

  Risks

  An inconsistent transaction recovery, earnings downgrades, and failure of policy expectations to materialize.

Key data

• Week 29 primary transaction floor area+7% wow / +5% yoyCovers approximately 75 cities.
• July-to-date primary transaction floor area-9% mom / +6% yoyBased on the median.
• Year-to-date primary transaction floor area-12% yoyCompared with 2024 and 2023, respectively, at -13% and -37%.
• Week 29 secondary transaction floor area+1% wow / +7% yoyCovers approximately 20 cities.
• Year-to-date secondary transaction floor area+1% yoyCompared with 2024 and 2023, respectively, at +16% and +12%.
• Inventory balance-0.3% wow / -5.9% vs end-2025Based on approximately 20 cities.
• Months of inventory26.9 monthsBelow the June 2026 average of 27.5 months.
• July 2026 completion forecastHigh-teens percentage decline yoyFrom the GSPC tracker.
• FY26E completion forecast-15% yoyGoldman Sachs estimate.
• Strong SOE developer share price performance+7% wowCMSK and Poly A rose 10% and 8%, respectively.
• Offshore covered developer valuation34% NAV discount / 0.5x 2026E P/BRelative to forecast end-2026 NAV.
• Onshore covered developer valuation32% NAV discount / 0.4x 2026E P/BRelative to forecast end-2026 NAV.

Impact & implications

The implication for the China property chain is that short-term demand and sentiment have improved marginally, supporting strong SOE developer share prices and low-valuation recovery trades. However, the medium-term trends for primary sales, completions, and new starts remain weak, and the industry fundamentals have not yet formed a clear reversal. For investors, near-term attention can focus on the sustainability of transaction activity, changes in price expectations, and policy catalysts; over the longer term, it remains necessary to monitor whether sales can improve sustainably and transmit to inventory, cash flow, and the construction and completion chain.

Risks

• Primary housing transactions remain down year over year year to date, and the short-term sequential improvement may be insufficient to confirm a trend reversal.
• Completions and new starts are expected to continue declining by double digits, which may weigh on property-chain demand.
• Inventory remains close to 27 months, and destocking pressure remains significant.
• Developer share prices have already rebounded on a weekly basis; if transaction or policy data falls short of expectations, the valuation recovery may reverse.
• Some OCR text in the report contains recognition errors, and certain prices and security codes should be checked against the original tables.

What to watch

• Whether the year-over-year improvement in primary and secondary transactions can continue through the remainder of July.
• Whether broker and seller price expectations indices continue to rise and exceed key thresholds.
• Whether new listing supply continues to contract and whether this translates into stabilization of secondary prices.
• Follow-up validation of the GSPC completion tracker against NBS completion data.
• Whether the share price divergence between strong SOE developers and other developers widens.
• Whether P/B multiples and NAV discounts for offshore and onshore property stocks continue to recover from historical lows.