Week 29 Wrap
Market activities and sentiment sequentially improved at margin
Transaction volumes increased by 7% and 1% week over week in primary and secondary markets, sending month-to-date July year-over-year improvements in both markets to 6% and 2%, respectively.
Key highlights for the week
Market performance: Transaction volumes increased by +7%/+1% wow in primary/secondary, sending MTD-July yoy improvements in both markets to +6%/+2% yoy, respectively. The sequentially expanded transactions were mirrored by 1) secondary visitations at +2% wow, 2) strengthened price appreciation expectations which edged higher for both agents and home-sellers and 3) average 4% wow contraction of new listing supply (8% below June average and 19% below July-25 levels on aggregate basis), though secondary subscription sales (which leads registration-based sales by 1-2 weeks) recorded at largely flattish wow and new home search activities marginally declined 0.2% wow.
Key data points
- New homes sales volume was +7% wow and +5% yoy, while new home search activities marginally declined 0.2% wow.
- Secondary transactions were +1% wow and +7% yoy, with price appreciation expectations edging higher for both agents and home-sellers.
- MTD July: Primary GFA sold on median was -9% mom and was +6% yoy; secondary GFA sold on median was -10% mom and +2% yoy.
- YTD: Primary GFA sold on average was -12% yoy and was -13%/-37% vs. the 2024/2023 level; secondary GFA sold on average was +1% yoy and was +16%/+12% vs. the 2024/2023 level.
- Inventory balance was -0.3% wow, with inventory months at 26.9 (vs. average 27.5 in June-26).
- Valuation: Our covered stronger SOE developers saw share prices +7% wow on average, with CMSK (001979.SZ, Neutral) and Poly A (600048.SS, Neutral) outperforming at +10%/+8% wow; meanwhile, other developers saw share prices on average +5% wow. Our offshore/onshore coverage now trades at an average 34%/32% discount to end-2026E NAV and at 0.5X/0.4X 2026E P/Bs.
Implications
- Property sales in c.75 cities suggest top-100 developers’ contract sales are likely to drop 3% yoy in July, vs. -13% in June.
- Completions: GSPC tracker indicates high-teens % yoy decline in July (vs. -25% yoy/c.20% yoy decline in June by NBS/GSe) and -15% yoy in FY26E per GSe.
- New starts: New starts to record a mid-twenties % yoy decline in July (vs. -26%/high-twenties % yoy decline in June by NBS/GSe), based on the land sales trends in 300 cities and nationwide cement shipment ratio (-2.6pp wow to 39%).
- GTV for BEKE (new and existing) likely rose 2% yoy in 2Q26 (-23%/+12% for new/existing).
Primary market Week 29
GFA +7% wow and was +5% yoy, sending YTD to -12% yoy
Secondary market
Week 29/YTD volumes were +7%/+1% yoy, with price appreciation expectations edging higher for agents and home-sellers
Inventory Week 29
Inventory -0.3% wow and -5.9% from end-25 level, with inventory months at 26.9
GSPC completion tracker
GS Property Completion (GSPC) tracker indicates a high-teens % yoy decline in July-26 (vs. -25% yoy/c.20% yoy decline in June by NBS/GSe) and -15% yoy for FY26E per GSe, based on downstream supply/demand implied from our China float glass industry outlook and proprietary weekly float glass demand model.
Valuations
P/B valuation at downturn trough
- Over week 29, our covered stronger SOE developers saw share prices +7% wow on average, with CMSK (001979.SZ, Neutral) and Poly A (600048.SS, Neutral) outperforming at +10%/+8% wow; meanwhile, other developers saw share prices on average +5% wow.
- Our offshore coverage developers on average saw share prices +6% wow (vs. flattish for MSCI China); our onshore coverage developers averaged +7% wow (vs. -2% for CSI 300).
- Our offshore coverage now trades at an average 34% discount to end-2026E NAV and 0.5X 2026E P/B vs. 2H2008, 2H2011 and 1H2014 troughs of 39%, 0.7X; 73%, 0.9X; 58%, 0.9X.
- Our onshore coverage trades at an average 32% discount to end-2026E NAV and 0.4X 2026E P/B vs. 2H2008, 2H2011 and 1H2014 troughs of 67%, 1.6X; 64%, 1.5X; 61%, 1.2X.