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China Property Weekly Wrap Summary

Core Content Overview

This report provides a detailed analysis of the China property market performance during Week 20 and the year-to-date (YTD) trends, with a focus on the impact of reciprocal tariffs on different city tiers and developer types. It also includes insights on market sentiment, inventory levels, and valuation metrics for both offshore and onshore developers.

Key Highlights

• Transaction Rebound: Export-oriented cities showed a more upbeat performance in primary transactions, with a +26% wow increase in volume, outperforming other cities. However, their secondary transactions lagged behind, with +22% wow vs. +44% wow for other cities.

• Secondary Market Trends:

  • Secondary visitor traffic improved +2% wow in export-reliant cities, while other cities saw a decline of -3%.
  • Secondary listing supply dropped -7% wow in export-reliant cities, compared to -3% wow for other cities.
  • Sentiment remained stable, but new home search activities moderated -3% wow, 2% below the pre-tariff level.

• Market Performance:

  • Primary sales volume averaged +12% wow and +21% yoy.
  • Secondary sales volume averaged +42% wow and +23% yoy, with agents expecting price appreciation but homeowners not.

• Inventory Levels:

  • Inventory balance was flattish wow and -2.4% from end-24 levels.
  • Inventory months stood at 26.3 (vs. 25.9 in Apr-25).

Key Data Points

Primary Market

• Week 20: GFA sold increased +12% wow and +21% yoy, with tier-1 and Northern cities outperforming.
• MTD May:
  • Primary GFA sold: -5% mom and -12% yoy.
  • Tier-1: -1% mom, +11% yoy.
  • Tier-2: -4% mom, -14% yoy.
  • Tier-3: -7% mom, -11% yoy.
• YTD:
  • Primary GFA sold: +2% yoy on average and +5% yoy on aggregated volume basis.

Secondary Market

• Week 20: GFA sold increased +42% wow and +3% yoy.
• MTD May:
  • Secondary GFA sold: -26% mom and -6% yoy.
  • Tier-1: -24% mom, +6% yoy.
  • Tier-2: -27% mom, -7% yoy.
  • Tier-3: -24% mom, -9% yoy.
• YTD:
  • Secondary GFA sold: +9% yoy on average and +26% yoy on aggregated volume basis.

Developer Valuation and Performance

Offshore Developers

• Share Price: Averaged -2% wow decline, outperforming MSCI China (-1% wow).
  • Greentown (3900.HK): Outperformed with +2% wow.
• Valuation:
  • Traded at an average 38% discount to end-2025E NAV and 0.5X 2025E P/B.
  • Compared to historical troughs (2H2008, 2H2011, 1H2014), the current discount is 39%/0.7X, 73%/0.9X, and 58%/0.9X, respectively.

Onshore Developers

• Share Price: Averaged -1% wow decline, outperforming CSI 300 (flattish).
  • OCT (000069.SZ): Outperformed with +1% wow.
• Valuation:
  • Traded at an average 20% discount to end-2025E NAV and 0.5X 2025E P/B.
  • Compared to historical troughs, the current discount is 67%/1.6X, 64%/1.5X, and 61%/1.2X, respectively.

Implications

• Property Sales: Top-100 developers' presales likely to decline -12% yoy in May-25, vs. -7% yoy in April-25.
• Completions: MTD GSPC tracker indicates a high-teens yoy decline in May-25, -10% yoy for FY25E.
• New Starts: Expected to decline -20% yoy in MTD May, based on land sales trends and cement shipment ratios.
• Home Appliance Sales: Likely to decline yoy in MTD May, based on secondary sales trends.
• GTV for BEKE: Likely to remain flattish yoy, with -4% for new and +2% for existing.

Market Sentiment

• Agent Sentiment (CSI): Average +0.2pp wow and +2.2pp yoy, with >50 indicating positive price expectations.
• Home Seller Sentiment (CAI): Average -0.5pp wow and +1.1pp yoy, showing a more cautious outlook.
• New Home Search Demand: Fell -3.4% wow, 1% below 1Q25 and 3% below post-Sep-24 easing levels.

Developer Ratings

• Offshore:
  • Buy: Greentown (3900.HK)
  • Sell: China Vanke (H), Vanke (A), Gemdale (600383.SS)
  • Neutral: Seazen (1030.HK), Jinmao (0817.HK), Longfor (0960.HK)
• Onshore:
  • Buy: COLI (0688.HK), CR Land (1109.HK), Jinmao (0817.HK)
  • Sell: OCT (000069.SZ), Vanke (A), Poly (600048.SS)
  • Neutral: CMSK (001979.SZ), Gemdale (600383.SS)

Summary of Market Trends

Conclusion

The report highlights a mixed performance in the China property market, with export-oriented cities showing stronger primary transaction volumes but weaker secondary performance. Inventory levels are stable, and sentiment remains cautious, with new home search activities declining. Valuation metrics indicate a discount to NAV and P/B, suggesting potential undervaluation. Developer ratings are varied, with some showing outperformance despite market challenges.