Changjiang Securities·2025-11-02 13:18Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [12]. Core Insights - The profitability of real estate companies is currently under pressure due to falling prices of old inventory and unsold properties, making a systemic profit turnaround unlikely in the short term. However, a structural turnaround is anticipated, particularly for new properties post-2022, as land prices have decreased, leading to improved profitability for new inventory starting in 2024. As the peak of old inventory impairment subsides, the proportion of new and recently launched properties in revenue recognition will increase, potentially leading to improved profit margins for some companies by 2027. Despite ongoing market downturns affecting new property sales, there is expected policy support for high-quality developments, suggesting a sustainable structural market for "good properties" [2][10][12]. Market Performance - The Yangtze River Real Estate Index decreased by 0.88% this week, underperforming the CSI 300 by 0.45%. Year-to-date, the index has increased by 12.95%, but still lags behind the CSI 300 by 4.99% [7][15]. Policy Developments - The People's Bank of China plans to implement a one-time personal credit relief policy in early 2026 and has emphasized the need for prudent macro-management of real estate finance. The 14th Five-Year Plan outlines five key directions for promoting high-quality development in real estate, including optimizing housing supply and enhancing the quality of housing and property services [8][17]. Sales Trends - Recent data indicates a widening year-on-year decline in new and second-hand home transactions across sample cities. For instance, new home transaction area in 37 cities saw a rolling year-on-year decline of 35.4%, while second-hand homes in 17 cities declined by 24.3% [9][18]. Structural Market Changes - The current adjustment phase in the real estate cycle is characterized by convergence and differentiation, with some high rental yield cities stabilizing. The profitability of older inventory is under pressure, but new and recently launched properties are expected to see a significant increase in profitability starting in 2024, laying the groundwork for a structural turnaround [10][12].