China real estate Week 28 transactions weaken sequentially, with leading indicators continuing to decline

Overview

This report is Goldman Sachs’ Week 28 weekly tracking report on China’s real estate industry. Its core conclusion is that transaction volume weakened significantly on a weekly basis, with leading indicators declining in tandem: primary housing sales area, secondary housing transactions, secondary-market viewings, subscribed sales, and price expectations all came under sequential pressure. Policy language continued to support the stable and healthy development of the real estate market, but short-term stimulus was not clearly strengthened. In valuation terms, the developer sector is already near historical downcycle lows, but a fundamental recovery still requires improvement in transactions, price expectations, inventory clearance, and completion/new-start indicators for confirmation.

Core views

The report’s main views are as follows: First, the policy framework places greater emphasis on long-term housing supply, affordable housing, urban renewal, age-friendly and smart renovations, and housing provident fund reform, rather than directly strengthening short-term destocking or tax and fee stimulus. Second, near-term transaction momentum weakened, with primary housing transactions down 25% week on week and 6% year on year in Week 28, while secondary housing transactions fell 6% week on week and were broadly flat year on year. Third, year-on-year data month to date in July remained improved, with primary and secondary housing transactions up 5% and 11%, respectively, but sequential declines suggest that the recovery is not solid. Fourth, inventory months remain high and price expectations have declined marginally, reflecting continued weakness in market confidence. Fifth, the GSPC completion tracker and new-start leading indicators show that the construction chain remains under pressure. Sixth, developer valuations are low, but share-price performance has shown limited divergence: stronger SOE developers fell approximately 2% on average for the week, while COLI outperformed relatively.

Analysis framework

The report combines high-frequency weekly data with proprietary models to track primary housing transaction area in approximately 75 cities, secondary housing transactions and inventory in approximately 20 cities, Centaline price-expectation indicators, land sales across 300 cities, the national cement shipment ratio, a flat-glass supply and demand model, and share prices and valuations of covered developers. The analysis focuses on cross-validating short-term momentum and medium-term fundamental trends in the real estate industry across transactions, viewings, subscriptions, inventory, completions, new starts, and valuations.

Methodology notes

• High-frequency sales trackingPrimary and secondary housing GFA transaction tracking

  Weekly, month-to-date, and year-to-date changes in the gross floor area of primary and secondary housing transactions are measured across city samples.

  The report uses primary housing transaction data from approximately 75 cities and secondary housing transaction data from approximately 20 cities, comparing week-on-week, year-on-year, and levels relative to 2024 and 2023 to assess sales momentum.

• Inventory analysisInventory balance and inventory months

  Destocking pressure is measured through inventory balance and inventory months based on rolling 12-month sales.

  In Week 28, inventory balance fell 0.4% week on week, while inventory stood at 27.0 months, indicating that inventory declined slightly but the destocking cycle remains long.

• Leading indicatorsGSPC tracker

  The Goldman Sachs Property Completion tracker uses a flat-glass supply and demand model to estimate real estate completion trends.

  The model indicates that completions may have declined approximately 20% year on year in June 2026 and forecasts a 1% year-on-year decline in full-year 2026 completions.

• Price expectationsCentaline Salesman Index and Centaline Seller Asking Index

  CSI reflects brokers’ views on housing price increases, while CAI reflects changes in sellers’ asking prices.

  The report shows that CSI fell 2.2 percentage points month on month and CAI fell 0.4 percentage points month on month, indicating marginal weakening in price expectations among both brokers and sellers.

• Valuation comparisonNAV discount and P/B valuation

  Developer valuation levels are measured using discounts to estimated 2026-end NAV and estimated 2026 price-to-book ratios.

  Offshore and onshore covered developers trade at 39% and 36% discounts to estimated 2026-end NAV, respectively, while estimated 2026 P/B is 0.4x for both, at lows for the downcycle.

Asset mapping & comparison

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

• China real estate developer stocks

  Directly related

  Strengths

  Low valuations; some stronger SOE developers have greater financing capacity and ability to benefit from policy implementation.

  Weaknesses

  Sequentially weaker transactions, high inventory months, and declining price expectations point to an unstable fundamental recovery.

  Comparison

  Offshore and onshore covered developers both trade at approximately 0.4x 2026E P/B, at historical downcycle lows; offshore covered names fell 1% for the week, underperforming MSCI China’s 2% gain.

  Risks

  Further sales decline, worsening price expectations, insufficient policy support, and slow inventory clearance.

• Stronger SOE developers

  Relatively favored

  Strengths

  The market generally assigns greater recognition to their balance sheets, financing channels, and policy execution capabilities; COLI (0688.HK, Buy) rose 4% in Week 28.

  Weaknesses

  The sector remains constrained by industry-wide transaction and price pressures, with stronger SOE developers still falling 2% on average for the week.

  Comparison

  Stronger SOE developers fell 2% on average for the week, close to the 2% average decline for other developers, but individual stock performance diverged.

  Risks

  If industry sales continue to weaken, stronger SOE developers will also find it difficult to remain fully independent of the industry cycle.

• Securities related to the secondary housing market

  Indirectly related

  Strengths

  Year-to-date secondary housing transactions increased 1% year on year and 17% and 11% versus 2024 and 2023, respectively, showing greater resilience than primary housing.

  Weaknesses

  Transactions fell 6% week on week in Week 28 and 9% month on month month to date in July, while price expectations declined.

  Comparison

  Secondary housing outperformed primary housing year on year, but near-term momentum also weakened.

  Risks

  Weakening viewings and subscribed sales may lead and signal a subsequent slowdown in transactions.

• Real estate value-chain index

  Indirectly related

  Strengths

  If policy promotes urban renewal, affordable housing, old-community renovation, age-friendly upgrades, and smart home improvements, building materials, appliances, home furnishings, and other value-chain segments may receive thematic support.

  Weaknesses

  Weak completion and new-start indicators may constrain the realization of actual demand.

  Comparison

  The report lists building materials, construction companies, building products, decoration companies, appliances, and home furnishing indices as value-chain areas to monitor.

  Risks

  Construction-chain demand falling below expectations and real estate sales failing to drive post-cycle consumption.

Key data

• Week 28 primary housing transaction area-25% wow, -6% yoySample covers approximately 75 cities.
• Primary housing transaction area month to date in July-3% mom, +5% yoyYear-on-year performance month to date remains improved, but transactions declined sequentially.
• Average primary housing transaction area year to date-12% yoy, -13%/-38% versus 2024/2023, respectivelyThe primary housing market remains significantly below 2023 levels.
• Week 28 secondary housing transaction area-6% wow, broadly flat yoySample covers approximately 20 cities.
• Median secondary housing transaction area month to date in July-9% mom, +11% yoySecondary housing outperformed primary housing year on year, but weakened sequentially in the short term.
• Average secondary housing transaction area year to date+1% yoy, +17%/+11% versus 2024/2023, respectivelySecondary housing transactions have shown relatively greater resilience.
• Inventory balance-0.4% wow, -5.7% from end-2025Sample covers approximately 20 cities.
• Inventory months27.0 monthsThe June average was 27.5 months, still at a high level.
• GSPC guidance for June 2026 completionsApproximately -20% yoyBased on Goldman Sachs’ flat-glass supply and demand model.
• Full-year 2026 completion forecast-1% yoyGoldman Sachs estimate.
• Weekly share-price performance of covered developersStronger SOE developers average -2% wow, other developers average -2% wowCOLI (0688.HK, Buy) rose 4% for the week and performed relatively well.
• Valuation of covered developersApproximately 0.4X 2026E P/B for both offshore/onshoreOffshore and onshore covered names trade at 39% and 36% discounts to estimated 2026-end NAV, respectively.

Impact & implications

For investment implications, the report signals that a trend-level fundamental recovery has not yet been confirmed. Sequential weakness in transactions, declining price expectations, elevated inventory months, and pressure on completion/new-start indicators will weigh on developers’ earnings visibility and expectations for value-chain demand. At the same time, year-on-year improvement and low valuations provide some sector support, with developers backed by stronger balance sheets and clearer policy benefits, particularly SOE developers, potentially outperforming. Investors need to distinguish between low-valuation recovery opportunities and the risk of continued fundamental deterioration.

Risks

• Policy support is more focused on the medium to long term, with no clear strengthening of short-term destocking or tax and fee stimulus.
• Sequential weakness in primary and secondary housing transactions could slow year-on-year improvement later in July.
• Marginal declines in broker and seller price expectations could affect prospective buyers’ willingness to enter the market.
• Inventory months remain high and destocking pressure has not been materially resolved.
• Weak completion and new-start leading indicators could weigh on developers’ revenue recognition and value-chain demand.
• Although developer valuations are low, continued fundamental deterioration could prevent low valuations from supporting a sustained re-rating.

What to watch

• Whether year-on-year improvement in full-month July primary and secondary housing transactions can be sustained.
• Whether leading indicators such as secondary-market viewings and subscribed sales continue to decline.
• Whether price-expectation indicators such as CSI and CAI stabilize.
• Whether inventory balance and inventory months continue to decline.
• Whether official June and subsequent completion and new-start data are consistent with the GSPC tracker.
• Whether policy reintroduces more direct destocking, housing purchase, tax and fee, or financing support measures.
• Whether share-price divergence between stronger SOE developers and private/mixed-ownership developers widens.