Week 34 new home transactions accelerated sequentially and housing support policies broadened, but price expectations and development activity remained weak

Overview

The report reviews policies, transactions, inventory, construction activity, and developer valuations in China's real estate market during Week 34. Its core view is that new home transactions accelerated sequentially, housing support measures continued to be implemented at multiple levels, and some tier-one cities showed a marginal response following policy changes; however, search activity, secondary home price expectations, full-year new home transactions, and completion and new-start data continued to indicate fundamental pressure.

Core views

On the policy front, the State Council announced measures to optimize the housing provident fund system on August 18, effective September 20. The adjustments include expanding the scope for provident fund withdrawals and use, such as property management fees and other housing consumption scenarios approved by the State Council; removing the restriction linking rental withdrawals to a prescribed percentage of household income; including flexible workers in the system; promoting mutual recognition of contributions and withdrawals across locations; and broadening provident fund investment channels, such as allowing management centers to purchase policy financial bonds. The report believes these arrangements are broadly consistent with expectations at the beginning of the year. The mechanism for determining provident fund mortgage rates will also change, with rates to be set directly by the State Council, replacing the previous process under which the People's Bank of China made recommendations for State Council approval. Local policies continued to intensify. On August 21, Shanghai released eight housing easing measures, including expanding the use of provident funds for down payments on completed homes, allowing provident funds to be used simultaneously for down payments and housing loans, relaxing withdrawal frequency and amount limits, and including deed taxes and parking-space purchases within their permitted uses. The minimum down-payment ratio for second homes outside the Outer Ring Road was reduced by 10 percentage points to 15%, aligning it with that for first homes. Shanghai also introduced temporary home-purchase subsidies totaling RMB200mn, adopted housing-voucher resettlement for residents affected by urban village redevelopment and old-city renewal, and proposed purchasing secondary homes for conversion into government-subsidized rental housing. On August 20, Xiaoshan District in Hangzhou announced the issuance of RMB25mn in home-purchase vouchers covering 36 projects and three subsidy tiers. Transactions improved sequentially, although different indicators were not fully consistent. The report's overview states that new home transaction volume rose 14% month-on-month last week, while subsequent statistics covering approximately 75 cities show that new home transaction area increased 15% month-on-month and 6% year-on-year; meanwhile, new home search activity declined 1.9% month-on-month. Secondary home transactions fell 1% month-on-month and 5% year-on-year, although subscription sales, which lead registered transactions by approximately one to two weeks, increased 1% month-on-month. Secondary home visits and transaction prices were broadly similar to the previous week, while newly listed secondary home supply across approximately 75 monitored cities increased 4% month-on-month, and both agents' and sellers' expectations for home price increases continued to decline. The Centaline agent index fell by an average of 0.3 percentage points month-on-month and rose 3.4 percentage points year-on-year; a reading above 50 indicates that agents tend to expect home prices to rise. The Centaline seller asking-price index fell by an average of 0.1 percentage points month-on-month and 4.6 percentage points year-on-year. City performance diverged following policy changes. After Beijing introduced new easing policies in early August, its new home transaction volume rose 152% month-on-month in Week 34, continuing to lead among tier-one cities. The report also cites news that visits to new projects outside Shanghai's Outer Ring Road increased over the weekend following the policy announcement on August 21. The Bingshan Index showed that secondary home prices in Beijing, Shanghai, and Shenzhen were broadly flat month-on-month last week, improving from declines of 0.2%, 0.1%, and 0.2%, respectively, in the prior week; the national index fell 0.1% month-on-month both last week and the preceding week. A longer time horizon continued to show greater pressure in new homes than in secondary homes. Month-to-date in August, median new home transaction area fell 19% month-on-month and 16% year-on-year, while median secondary home transaction area fell 9% month-on-month and rose 1% year-on-year. Year-to-date, average new home transaction area across approximately 75 cities fell 12% year-on-year and was 19% and 40% below 2024 and 2023 levels, respectively. Average secondary home transaction area across approximately 20 cities rose 1% year-on-year and was 14% and 13% above 2024 and 2023 levels, respectively. Sales data across approximately 75 cities also indicate that August contracted sales among the top 100 developers may decline 4% year-on-year, a smaller decrease than July's 8%. Inventory continued to decline, but the destocking period remained long. The inventory balance across approximately 20 cities fell 0.6% month-on-month and 7.7% from the end of 2025; the inventory destocking period was 27.3 months, compared with averages of 27.5 months and 27.1 months in June and July 2026, respectively. Another 12-month rolling months-of-inventory indicator was flat week-on-week and 2.4% below the end-2025 level. This indicates that total inventory has been gradually absorbed, but the sales pace has not yet produced a meaningful reduction in the destocking period. Construction activity indicators remained weak. Based on the outlook for supply and demand in China's float glass industry and its proprietary weekly float glass demand model, the Goldman Sachs Property Completion tracker estimates that completed floor area may decline by the high teens year-on-year in August 2026. For comparison, July data from the National Bureau of Statistics declined 19% year-on-year, while Goldman Sachs similarly estimated a high-teens decline. Goldman Sachs expects completed floor area to decline 15% year-on-year in FY2026. Based on land sales trends across 300 cities and a 6.1-percentage-point month-on-month increase in the national cement shipment rate to 43.5%, the report expects new-start floor area to decline by the high twenties year-on-year in August; July data from the National Bureau of Statistics fell 28%, while Goldman Sachs estimated a mid-twenties decline. Platform transaction indicators were relatively strong. The report estimates that Beike's combined GTV for new and existing homes may have grown 13% year-on-year from July through August month-to-date, including 19% growth in new homes and 10% growth in existing homes. This is significantly above the internet team's estimate of 1% combined growth for the third quarter of 2026, based on assumptions of flat new home GTV and 1% growth in existing home GTV. In terms of stock performance, the stronger SOE developers covered by the report gained an average of 1% in Week 34. Greentown China, China Overseas Land & Investment, and China Jinmao rose 5%, 3%, and 3%, respectively, and all three companies are rated Buy. Other developers declined by an average of 1%. Offshore covered developers gained an average of 2%, outperforming the 1% rise in the MSCI China Index; onshore covered developers fell by an average of 3%, but outperformed the 4% decline in the CSI 300 Index. In terms of valuation, offshore covered developers traded at an average discount of 34% to estimated end-2026 NAV, corresponding to an estimated 2026 P/B ratio of 0.5x. Historical downturn comparisons were a 39% discount and 0.7x in 2H08, a 73% discount and 0.9x in 2H11, and a 58% discount and 0.9x in 1H14. Onshore covered developers traded at an average discount of 32% to estimated end-2026 NAV, corresponding to an estimated 2026 P/B ratio of 0.4x. Comparisons for the same three historical periods were a 67% discount and 1.6x, a 64% discount and 1.5x, and a 61% discount and 1.2x, respectively. Based on this, the report describes current P/B valuations as near the lows of previous downturns.

Analysis framework

The report first reviews the latest central and local housing support policies, then assesses marginal changes in transactions and price expectations using high-frequency data for new homes across approximately 75 cities, secondary homes across approximately 20 cities, and tier-one cities. It subsequently extends the weekly data to August month-to-date and year-to-date, and combines inventory, land sales, cement shipments, and a float glass supply-demand model to estimate trends in new starts and completions. Finally, it compares covered developers' share-price performance, NAV discounts, and estimated P/B ratios, using historical downturn periods as valuation references.

Methodology notes

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Separate tracking of transaction volumes, search activity, and price expectations

  The report separately examines new and secondary home transaction area, search activity, listed supply, agent expectations, and seller asking prices to avoid judging whether the market is improving broadly based solely on transaction volume.

• Industry/Sector Analysis FrameworkSupply-demand framework

  GS Property Completion tracker and float glass supply-demand model

  The report uses downstream float glass supply-demand conditions and a weekly demand model to estimate completed real estate floor area, supplementing official completion statistics with high-frequency industry data.

• Cycle and Business Conditions FrameworkCycle Inflection Analysis

  Comparison across weekly, monthly, and year-to-date time horizons

  The report compares month-on-month, year-on-year, month-to-date, and year-to-date data to distinguish a short-term transaction rebound from the medium-term fundamental trend.

• Valuation MethodPB valuation

  Estimated 2026 P/B ratios and comparison with historical troughs

  The report compares the current estimated P/B ratios of offshore and onshore developers with industry trough levels in 2H08, 2H11, and 1H14 to assess current valuation positioning.

• Valuation MethodP/NAV Resource and Property Valuation

  Discount to estimated end-2026 NAV

  The report measures developer valuations through share-price discounts to estimated net asset value, with average discounts of 34% and 32% for offshore and onshore covered companies, respectively.

Asset mapping & comparison

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

• China Real Estate Market

  Central and local policies continued to ease, and new home transactions accelerated sequentially in Week 34, but medium-term sales, price expectations, and construction activity remained under pressure.

  Strengths

  New home transaction area across approximately 75 cities rose 15% month-on-month and 6% year-on-year, while the inventory balance continued to decline.

  Weaknesses

  Year-to-date new home transactions fell 12% year-on-year, new home search activity declined, and expectations for secondary home price increases continued to weaken.

  Comparison

  Year-to-date secondary home transactions rose 1% year-on-year, outperforming new homes.

• Greentown China (3900.HK)

  The report classifies it among the stronger developers, and it significantly outperformed the group's average in Week 34.

  Strengths

  Buy rating; share price rose 5% in Week 34.

  Comparison

  The stronger SOE developer group gained an average of 1%, while other developers declined by an average of 1%.

• China Overseas Land & Investment (0688.HK)

  The report classifies it among the stronger SOE developers, and it delivered relatively strong performance in Week 34.

  Strengths

  Buy rating; share price rose 3% in Week 34.

  Comparison

  Above the stronger SOE developer group's average weekly gain of 1%.

• China Jinmao (0817.HK)

  The report classifies it among the stronger SOE developers, and it delivered relatively strong performance in Week 34.

  Strengths

  Buy rating; share price rose 3% in Week 34.

  Comparison

  Above the stronger SOE developer group's average weekly gain of 1%.

• Goldman Sachs-Covered Offshore Developers

  Share-price performance slightly outpaced the MSCI China Index in Week 34, while valuations remained low.

  Strengths

  Average weekly gain of 2%, above the MSCI China Index's 1%.

  Weaknesses

  Average discount of 34% to estimated end-2026 NAV.

  Comparison

  Estimated 2026 P/B of 0.5x, below the 0.7x, 0.9x, and 0.9x levels for the three historical downturn periods listed in the report.

• Goldman Sachs-Covered Onshore Developers

  The group declined overall in Week 34 but slightly outperformed the CSI 300 Index.

  Strengths

  Average decline of 3%, better than the CSI 300 Index's 4% decline.

  Weaknesses

  Average discount of 32% to estimated end-2026 NAV.

  Comparison

  Estimated 2026 P/B of 0.4x, below the 1.6x, 1.5x, and 1.2x levels for the three historical downturn periods listed in the report.

Key data

• Week 34 new home transaction area across approximately 75 citiesMonth-on-month +15%, year-on-year +6%The report's overview separately states that new home transaction volume rose 14% month-on-month
• New home search activityMonth-on-month -1.9%Online search activity declined despite improved transactions
• Week 34 secondary home transactions across approximately 20 citiesMonth-on-month -1%, year-on-year -5%Subscription sales, which lead registered transactions by one to two weeks, rose 1% month-on-month
• Median August month-to-date new home transaction areaMonth-on-month -19%, year-on-year -16%The monthly window remained weaker than the single-week performance in Week 34
• Year-to-date new home transaction areaYear-on-year -12%19% and 40% below 2024 and 2023 levels, respectively
• Year-to-date secondary home transaction areaYear-on-year +1%14% and 13% above 2024 and 2023 levels, respectively
• Inventory balanceMonth-on-month -0.6%, -7.7% from the end of 2025Based on approximately 20 monitored cities
• Inventory destocking period27.3 monthsAverages for June and July 2026 were 27.5 months and 27.1 months, respectively
• August contracted sales forecast for the top 100 developersYear-on-year -4%Year-on-year -8% in July
• Estimated completed floor area in August 2026Down by the high teens year-on-yearEstimated by the GSPC model; FY2026 forecast at -15% year-on-year
• Estimated new-start floor area in August 2026Down by the high twenties year-on-yearBased on land sales across 300 cities and cement shipment rates; the cement shipment rate rose 6.1 percentage points month-on-month to 43.5%
• Estimated Beike GTV from July through August month-to-dateYear-on-year +13%New homes +19% and existing homes +10%, above the internet team's estimate of +1% combined growth for the third quarter of 2026
• Valuation of offshore covered developers34% discount to estimated end-2026 NAV, with estimated 2026 P/B of 0.5xOffshore covered developers gained an average of 2% in Week 34
• Valuation of onshore covered developers32% discount to estimated end-2026 NAV, with estimated 2026 P/B of 0.4xOnshore covered developers declined by an average of 3% in Week 34

Impact & implications

The report believes that broader policy support and the acceleration in Week 34 new home transactions indicate that demand in some cities can respond marginally to easing measures, with relevant signs already emerging in Beijing and in projects outside Shanghai's Outer Ring Road. However, declining new home searches, weakening secondary home price expectations, continued year-to-date declines in new home transactions, and further contractions in completions and new starts suggest that the single-week improvement has not yet translated into a broad and sustained fundamental recovery. At the equity level, stronger SOE developers outperformed other developers, while the estimated P/B ratios of covered companies are already near or below the levels seen during several historical downturns.

What to watch

• Monitor withdrawals, lending, and cross-city use after the new housing provident fund rules take effect on September 20.
• Monitor the subsequent impact of the lower down-payment ratio for second homes outside Shanghai's Outer Ring Road and home-purchase subsidies on project visits and transactions.
• Track whether the single-week acceleration in new home transactions can extend into monthly data and improve the year-to-date year-on-year decline.
• Track whether newly listed secondary home supply, agents' price expectations, and the seller asking-price index continue to weaken.
• Monitor whether the inventory destocking period across approximately 20 cities can decline further from 27.3 months.
• Track the new-start and completion trends indicated by land sales, cement shipment rates, and the float glass demand model.
• Monitor whether the year-on-year decline in August contracted sales among the top 100 developers narrows to 4% as estimated in the report.