13 January 2026 | 6:57AM CST Equity Research China Property: Potential housing provident fund (HPF) reform might help to stabilize market We note heightened focus by top-level policymakers on housing provident fund system reform recently. While we look for further official government announcement and details on the reform, we provide a quick introduction of HPF in this report. Overall, we expect potentially larger-scale, lower-cost HPF lending could help stimulate the weak housing market, especially for the ...

Summary of China Property Weekly Wrap Industry Overview - The report focuses on the **Chinese property sector**, highlighting recent market activities and policy changes affecting the industry. Key Highlights 1. **Central Level Policies**: - Emphasis on stabilizing market expectations in the property sector due to housing's role as a financial asset and household wealth repository [1] - Policy easing is deemed necessary to align with market expectations and prevent speculation cycles [1] - Recent tax cuts include a reduction in VAT on properties held for less than two years from 5% to 3%, marking the first reduction since 2016 [1] 2. **Market Activity**: - Transaction volumes in the primary market decreased by **18% week-over-week (wow)** and **33% year-over-year (yoy)**, while secondary market transactions fell by **29% wow** and **27% yoy** [2] - Overall market activities softened, with secondary visitation down **9% wow** and new listing supply down **5% wow** [2] - Market sentiment remained stable, with price cuts holding at a ratio of approximately **15 times** those with price increases [2] 3. **Key Data Points**: - New home sales volume averaged **-18% wow** and **-33% yoy**; new home search activities increased by **1.5% wow** [5] - Secondary transactions averaged **-29% wow** and **-27% yoy** [5] - Inventory balance increased by **0.1% wow**, with inventory months at **28.7**, compared to an average of **28.0** in December 2025 [13] 4. **Valuation Insights**: - Stronger state-owned enterprise (SOE) developers saw share prices increase by **6% wow**, with notable performers like Jinmao (+9% wow) and Greentown (+8% wow) [25] - Offshore coverage developers traded at an average **33% discount** to end-2026 estimated net asset value (NAV) [25] - Onshore coverage developers traded at an average **13% discount** to end-2026 estimated NAV [25] 5. **Completions and New Starts**: - Completions are expected to show a **mid-single-digit percentage (MSD)** improvement in December 2025, contrasting with a **-25% to -18% yoy** decline in previous months [18] - New starts are anticipated to decline steeply, reflecting land sales trends and cement shipment ratios [18] Additional Insights - The report indicates a potential decline in home appliance sales based on secondary sales trends in approximately **20 cities** [18] - The overall market remains under pressure, with significant year-over-year declines in both new and existing home sales expected to continue into the next quarter [18] This summary encapsulates the critical aspects of the current state of the Chinese property market, including policy impacts, market activity, and valuation trends, providing a comprehensive overview for investors and stakeholders in the sector.

Vi e w p o i n t | 05 Jan 2026 10:38:45 ET │ 13 pages China Property Qiushi Journal Commentary on the Sector: Positive but Not Overread CITI'S TAKE Commentary from Qiushi Journal (official media under the CPC Central Committee) (2-Jan-2026) mentioned: [1] property exhibits notable characteristics of financial assets with wide-ranging interconnections, thus enhancing expectation mgmt is critical; [2] property is a pillar industry ('24: 13% of GDP incl. construction; 70m employment) & major source of resident ...

Summary of Conference Call on China Property Industry Industry Overview - The report focuses on the China property industry, specifically analyzing the land acquisitions and sales outlook for 2025 and 2026 [1][10]. Key Findings on Land Acquisitions - **Land Purchase Growth**: The value of land purchases by listed companies increased by 15% year-over-year (yoy) to RMB 478 billion, contrasting with a 7% decline in 300 cities [2][16]. - **Acquisition Concentration**: Only 13 listed companies participated in land purchases in 2025, accounting for 43% of the total, with the top five companies responsible for 71% of the acquisitions [4][24]. - **Geographic Focus**: There was a slight increase in spending in Tier-2 cities, which accounted for 42% of total land purchases in 2025, up from 40% in 2024 [3][32]. - **Top Buyers**: The leading companies in land acquisition included COLI, Poly China, and CR Land, with significant yoy growth from COGO (+96%), Jinmao (+78%), and CMSK (+56%) [4][26]. Sales Outlook - **Sales Projections**: Estimated sales for 2026 are expected to decline by 16% yoy, following a 25% decline in 2025. State-owned enterprises (SOEs) are projected to have a smaller decline of 6%, while non-SOEs may see a 17% drop [6][19]. - **Luxury Market Resilience**: High-end properties in core cities are expected to perform better, with companies like Jinmao and Greentown projected to achieve slight sales growth [6][19]. - **Market Dynamics**: The majority of land acquisitions were made by SOEs, which accounted for 75% of land purchases in 2025, indicating a trend towards consolidation in the market [6][19]. Financial Metrics - **Attributable Sales Ratio**: Land purchases represented 33% of attributable sales, marking a new high since 2021, indicating increased investment appetite among leading companies [2][20]. - **Cost Trends**: The average land acquisition cost increased by 23% yoy, reflecting a premium for prime land in Tier-1 and Tier-2 cities [3][20]. Additional Insights - **Market Conditions**: The land market was more active in the first half of 2025, driven by a recovery in sales and a decrease in inventory levels in top cities. However, activity slowed in the second half due to declining sales and secondary price drops [19][36]. - **Strategic Focus**: Companies are increasingly focusing on acquiring high-quality land rather than engaging in indiscriminate purchases, with a notable shift towards securing resources in economically robust Tier-2 cities [15][32]. Conclusion - The China property market is experiencing a complex landscape characterized by selective land acquisitions, a focus on high-quality assets, and a challenging sales environment. The performance of leading companies will be critical in navigating these dynamics as they prepare for 2026.

Summary of China Property Weekly Wrap Industry Overview - The report focuses on the **Chinese property market**, specifically analyzing the performance of primary and secondary real estate transactions in the context of fiscal year 2025 (FY25) and the outlook for 2026. Key Highlights 1. **Policy Initiatives**: - The Ministry of Housing and Urban-Rural Development (MOHURD) has outlined priorities for 2026 aimed at stabilizing the property market, including: - City-specific measures to control new supply and reduce inventory through urban renewal and buybacks of unsold homes for affordable housing [1] - Promotion of high-quality housing initiatives [1] - Enhancement of the "white-list" financing mechanism to support developers' financing needs [1] - Empowerment of local governments to adjust housing policies to support demand [1] - Advancement of new development models to mitigate delivery risks [1] 2. **Local Policy Adjustments**: - Beijing has eased local home purchase restrictions, allowing families with multiple children to buy an additional home within the 5th Ring Road [2] - Potential adjustments in home-purchase rules in other Tier-1 cities like Shanghai and Shenzhen are anticipated [2] 3. **Market Activity**: - Transactions in the primary market improved by **29% week-over-week (wow)**, while the secondary market saw a **5% wow** increase, despite year-over-year (yoy) declines of **-16%** and **-1%** respectively [3][8] - The ratio of units with price cuts narrowed to **15.4 times** those with price increases in December, down from approximately **18 times** in the previous months [3] 4. **Sales and Inventory Data**: - New home sales volume was **-37% yoy**, with search activities down **1.1% wow** [4] - Inventory levels increased by **0.1% wow** but decreased by **3.5%** from the end of 2024, with inventory months at **28.4** [20] 5. **Valuation Insights**: - Stronger state-owned enterprise (SOE) developers experienced a **-1% wow** decline in share prices, while privately-owned enterprises (POE) saw a **-2% wow** drop [32] - Offshore developers are trading at an average **37% discount** to end-2026 estimated net asset value (NAV) [32] 6. **Sales Forecasts**: - Property sales in approximately **75 cities** suggest that top-100 developers' presales are likely to decline **41% yoy** in December, compared to **-36%** in November [8] - Completions are expected to show a **mid-single-digit percentage improvement** yoy in December, with a **-10% yoy** decline projected for FY25 [24] 7. **Market Sentiment**: - Secondary market sentiment remains steady, with subscription-based sales and visitations flattening [3] - Home appliance sales are likely to record a yoy decline in December based on trends in **20 cities** [8] Additional Insights - The report indicates a potential steepened decline in new starts in December, based on land sales trends and cement shipment ratios [8] - The overall market sentiment reflects cautious optimism due to policy adjustments and localized easing measures, which may influence investor focus in the near term [2][3] This summary encapsulates the critical insights and data points from the China Property Weekly Wrap, providing a comprehensive overview of the current state and outlook of the Chinese property market.

Summary of China Property Market Conference Call Industry Overview - The conference call focused on the **China Property** market, highlighting significant declines in various metrics related to real estate investment and sales. Key Points Real Estate Investment (REI) Trends - **November REI** experienced a record drop of **30.3% YoY**, marking the sharpest decline on record, with a total of **RMB 0.5 trillion**, the lowest monthly figure since April 2012 [1][11] - **Completion rates** fell by **26% YoY** in November, slightly improved from **28%** in October [1] - **Starts** decreased by **28% YoY**, consistent with a **29%** decline in October [1] - **Residential sales** dropped by **28% YoY**, the largest single-month decline since May 2024 [1] - The **70-cities price index** for new homes decreased by **2.8% YoY** in November, while secondary homes saw a **5.7% YoY** decline [1] Market Dynamics - **Secondary market sales** in 18 key cities fell by **22% YoY** in November, with average weekly volume showing a **13% MoM** increase, driven by price cuts [2] - Listings in 39 cities remained stable, but cities like Shenzhen and Xi'an saw increased listings, putting pressure on prices [2] - A survey indicated only **9%** of depositors expect housing prices to rise in 2026, a historical low [2] Future Projections - The outlook for 2026 suggests a **structural decline** in the market unless liquidity improves, with expectations of: - **REI** down **13% YoY** - National sales down **11% YoY**, with residential sales projected at **RMB 6.8 trillion** [3] - New home average selling prices (ASP) expected to fall by **3% YoY** [3] - Starts anticipated to drop to levels last seen in 2003, with a **15% YoY** decline [3] Policy and Regulatory Environment - The **Central Economic Work Conference (CEWC)** indicated a more proactive policy tone, with potential demand-side easing measures expected in Q4 2025 [4] - Urban renewals and REIT approvals are likely to accelerate, but significant changes in home price expectations are not anticipated due to ample supply [4] - Monitoring for targeted monetary easing or pro-leverage initiatives is advised, though the likelihood remains low [4] Market Sentiment and Investment Recommendations - The sector's share prices corrected in early December amid debates over weak sales and expectations of policy-driven rebounds, particularly following Vanke's debt extension [5] - Anticipated earnings downgrades in December and January for well-known names in the sector [5] - Luxury mall retail sales are expected to maintain a positive trend in Q4 after outperforming in Q3 [5] - Recommended stocks include **Jinmao, C&D, and CRL** as top picks [5] Additional Insights - The **macro environment** shows mixed signals, with November exports beating expectations at **5.9% YoY**, while retail sales decelerated to **1.3% YoY** despite a higher CPI of **0.7%** [1] - Fixed Asset Investment (FAI) remains weak, down **12%** YoY, with a cumulative decline of **2.6%** for the first eleven months [1] This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of the China property market, emphasizing the significant challenges and potential policy responses.

Summary of Conference Call on China Property Market Industry Overview - The conference call focuses on the **China Property** market, highlighting ongoing challenges and forecasts for 2026 and beyond. Key Points and Arguments Market Conditions - **Weak Construction Activity**: Primary housing market construction is expected to remain weak in 2026E-2027E due to persistent liquidity stress and high inventory levels in the industry [1] - **Property Fixed Asset Investment (FAI)**: A potential deceleration in the current double-digit year-on-year decline in property FAI may occur if it reaches 85% of property sales by 2027E, as property FAI primarily reflects the cost of property sales [1] - **Secondary Housing Market**: The supply/demand imbalance in the secondary housing market is anticipated to take longer to adjust, delaying price stabilization [1] Financial Stress and Developer Challenges - **Loan Maturity Extensions**: There is uncertainty regarding the scope for further loan maturity extensions for developers, as high debt levels and declining property sales have offset benefits from interest rate reductions [1] - **Interest Expense**: Interest expenses for privately owned enterprises (POE) developers account for approximately 70% of total developer industry expenses, significantly higher than the 5-6% for larger state-owned enterprises (SOEs) [1] - **Liquidity Stress**: The liquidity stress in the industry is deepening, with increasing risks of credit defaults [1][36] Mortgage Market Dynamics - **Elevated Loan-to-Value Ratios (LTVs)**: The ongoing decline in property prices is raising LTVs for mortgages and operating loans, with a base-case scenario estimating Rmb5.2tn and Rmb0.8tn in outstanding mortgages and operating loans meeting the 80% LTV threshold [2][86] - **Bear-case Scenario**: A potential 30% decline in property prices could lead to Rmb14.7tn in mortgages meeting the 80% LTV threshold, indicating significant risk in the mortgage market [86] Economic Implications - **Household Debt Service Burden**: The household debt service burden in China is projected to remain high at over 15% in 2025E-2027E, raising concerns about a negative feedback loop affecting home prices and credit availability [5][77] - **Policy Stimulus**: Key factors to watch include any new policy stimulus aimed at reviving demand and targeted liquidity injections to developers with land banks in tier-1 and tier-2 cities [6] Adjusted Forecasts - **EPS Estimates**: The underlying EPS estimates for developers have been cut by 7-31% on average for 2025E-2027E, reflecting a weaker fundamental outlook [10] - **ASP Trends**: The average selling price (ASP) forecast for the secondary housing market has been revised down due to ongoing price cuts and weak transaction volumes [9] Developer Liquidity and Debt Restructuring - **Distressed Developers**: The report highlights the ongoing liquidity pressures faced by developers, with 28 major listed developers experiencing significant declines in asset turnover ratios and increasing numbers of distressed developers [42][52] - **Debt Restructuring Progress**: As of October 2025, 19 companies have had their debt restructuring plans approved, with a total estimated debt reduction exceeding Rmb1.2tn [69][70] Market Outlook - **Overall Market Weakness**: The overall outlook for both primary and secondary markets is expected to weaken further, with sell-through rates declining [22][25] - **Land Sales and Construction**: Land sales and construction activities are projected to remain weak until property FAI aligns more closely with property sales [27] Additional Important Insights - **Rental Price Stabilization**: Rental price stabilization is viewed as a key driver for property price stabilization in higher-tier cities [13] - **Fair Value Gap**: There is an estimated 10%-15% property price gap to fair value, which could widen to 30% if deflationary pressures persist [16] This summary encapsulates the critical insights and forecasts regarding the China property market, emphasizing the ongoing challenges and potential risks for investors and stakeholders in the industry.

9 December 2025 Daily dose of HK & mainland China Real Estate Research Focus and Views on the News HK & mainland China Highlights of the day Hong Kong Mainland China Research focus China Real Estate: 2026: Time to move on from analysis paralysis Michelle Kwok* Head of Asia Real Estate and HK Equity Research The Hongkong and Shanghai Banking Corporation Limited michellekwok@hsbc.com.hk +852 2996 6918 Analyst, Asia Real Estate and Conglomerates The Hongkong and Shanghai Banking Corporation Limited raymond.w.m ...

Summary of Conference Call on China Property Sector Industry Overview - The conference call discusses the **China Property** sector, focusing on potential mortgage subsidies and their implications for the market. Key Points and Arguments 1. **Mortgage Subsidies Speculation**: - Market speculation suggests that China may provide **Rmb400 billion** in mortgage subsidies, potentially effective from early **2026** for purchases made between **September 1, 2025**, and **August 31, 2026**. The subsidy is speculated to be **1%**, with a possibility of up to **2%** in higher-risk areas [1][3][4]. 2. **Impact on Homebuyers**: - The average mortgage rates are currently **3.0%** for first homes and **3.3%** for second homes. With a **1%** subsidy, effective rates could drop to **2.0%-2.3%**, aligning closer to average rental yields of **~1.5%** in tier-1 cities and **~2%** in tier-2 cities. This could reduce monthly payments by **Rmb694-1,143** for homes valued at **Rmb1-2 million**, translating to total savings of **Rmb25,000 to 41,100** over three years [3][9]. 3. **Market Reaction**: - Following the speculation, shares of Vanke surged by **13%**, while Sunac and Jinmao rose by **9%**. In contrast, large-cap SOEs like CR Land and COLI saw only mild increases of **0-1%**, indicating that excitement was primarily driven by short covering rather than strong investor confidence in the policy [1][13]. 4. **Long-term Effectiveness**: - The effectiveness of the subsidies is questioned, as the core issue remains weak expectations for home prices. Secondary home prices have been declining at a rate of **~1.5%** monthly, which could negate the benefits of the subsidies shortly after implementation [4][12]. 5. **Policy Timing**: - The next potential policy window for discussing housing market support is the **CEWC** in the next **1-2 weeks**. If no new narrative emerges, the next opportunity for announcements would be during the **Two Sessions** in **March 2026** [5]. 6. **Retail Sales Impact**: - The mortgage subsidies, if fully utilized, could represent **0.8%** of China's retail sales, suggesting that the savings from mortgage repayments may have a more significant impact on retail sales than on the housing market itself [5]. Additional Important Information - **Historical Accuracy of Speculation**: The historical accuracy of market speculation regarding housing policies has been around **40%**, indicating a level of skepticism regarding the reliability of such forecasts [1][6]. - **Local Subsidy Examples**: Cities like Wuhan and Changchun have already implemented similar subsidies with caps ranging from **Rmb20,000 to 40,000** [8]. - **Share Price Performance**: The report includes detailed share price performance data for various companies in the sector, highlighting the mixed reactions to the speculation [13][19]. Conclusion - The potential introduction of mortgage subsidies in the China Property sector has generated significant market speculation and short-term excitement among investors. However, the long-term effectiveness of such measures remains uncertain, primarily due to ongoing declines in home prices and the need for stronger government commitment to stabilize the market.

Summary of Key Points from J.P. Morgan's Conference Call on Mainland China and Hong Kong Property Industry Overview - The conference call focused on the property sectors in Mainland China and Hong Kong, highlighting investor sentiment and stock performance trends [1][2]. Key Insights on Mainland China Property - **Investor Sentiment**: There is a mixed feedback regarding expectations for the upcoming Politburo and CEWC meetings, with hedge funds (HFs) looking for short-term trading opportunities due to deteriorating housing market data [5]. - **Stock Interest**: CR Land and CR Mixc are the most enquired stocks among Mainland China property companies, while SHKP, Link REIT, Henderson, Sino, and Hang Lung are of higher interest among Hong Kong property companies [1]. - **Earnings Expectations**: Investors expect a single-digit percentage decline in FY25 earnings for CR Land, with concerns that earnings may drop to a mid-teens percentage decline due to delays in disposals [6]. - **CR Mixc Performance**: Strong interest in CR Mixc is noted, with a 10-15% same-store tenant sales growth in 10M25. However, investors are cautious about its high P/E ratio (>20x) and are waiting for a better entry point [6]. Key Insights on Hong Kong Property - **Market Recovery**: Most investors agree that the Hong Kong residential market is recovering, but there is uncertainty regarding which stocks to invest in. SHKP is favored, but its 3.8% dividend yield is seen as unattractive by some [8]. - **Sino Land Performance**: Sino Land has performed well (+44% YTD), but concerns exist regarding its future earnings and landbank replenishment. Generalist investors are more focused on its high dividend certainty [8]. - **Henderson Land Concerns**: Investors are worried about potential dividend cuts, although recent management comments have alleviated some concerns [9]. - **Hang Lung's Recovery**: Hang Lung has seen a notable improvement in tenant sales, which has attracted more interest from long-only investors (LOs) [10]. - **Link REIT's Cautious Outlook**: Investors were surprised by Link REIT's cautious tone regarding negative rental reversion, which is expected to worsen. Many are waiting for signs of improvement before investing [10]. Valuation Insights - **Valuation Metrics**: The report includes a valuation summary for both Mainland China and Hong Kong property sectors, indicating various P/E ratios, dividend yields, and share price returns for key companies [11][13]. - **Investor Preferences**: There is a shift in investor focus from dividend yield to P/E and NAV discount as the market sentiment becomes more risk-on, although dividend yield remains a primary valuation yardstick for many [10]. Additional Considerations - **Short-Term Trading**: Some hedge funds are interested in short-term trades ahead of government meetings, particularly if CR Land trades below HK$29 and Longfor below HK$10 [5]. - **Vanke's Bond Extension**: Most property-focused investors are not overly concerned about Vanke's bond extension, viewing it as a non-surprising development [5]. This summary encapsulates the key points discussed during the conference call, providing insights into investor sentiment, stock performance, and valuation metrics within the property sectors of Mainland China and Hong Kong.