Investment Rating - The investment rating for the real estate industry is "Positive" and maintained [8] Core Insights - Since Q2 2025, the pressure on volume and price has continued to increase, approaching policy thresholds, posing new challenges to the goal of stabilizing the market. Expectations for policy easing are gradually strengthening, with significant meetings potentially serving as a buying window for the sector. The trading level in July is expected to be lower than in September [2][11] - The report suggests prioritizing high-quality real estate companies with relatively low inventory pressure and strong product capabilities. It also recommends considering companies undergoing marginal improvements and debt restructuring. In the context of low interest rates and asset shortages, leading enterprises in commercial real estate, property management, and brokerage with stable cash flows and potential high dividends remain medium to long-term investment opportunities [2][11] Summary by Sections Market Performance - From January to June 2025, national sales of commercial housing decreased by 5.5% in value and 3.5% in area year-on-year, with the decline in sales accelerating in June to 10.8% in value and 5.5% in area. The sales area decline aligns with trends in key cities and top 100 real estate companies [11] - In June, the price index for new and second-hand homes in 70 cities fell by 0.3% and 0.6% month-on-month, respectively, with the decline in first-tier cities also accelerating [11] Construction and Investment Trends - The year-on-year decline in new construction area from January to June 2025 was 20.0%, with a smaller decline of 9.4% in June. The completion area also saw a year-on-year decline of 14.8% [11] - The total funds available to real estate companies decreased by 6.2% year-on-year, with a notable decline in deposits and pre-sales [11] Future Outlook - The report anticipates that the most challenging period for the real estate industry may be nearing its end, with expectations of double-digit declines in construction and investment for the year 2025. Sales performance will depend on the effectiveness of future policies [11]

Summary of Conference Call on Real Estate Market Industry Overview - The conference call focuses on the real estate industry, particularly the current market conditions and policy expectations for Q3 2023. Key Points and Arguments 1. **Market Performance**: As of June, most cities have seen housing prices drop below the levels of September last year, with a continuous decline in prices across 50 cities from April to June, recording decreases of 1.3%, 1.4%, and 1.6% respectively [2][3][6] 2. **Policy Expectations**: There is a high expectation for more aggressive policies to stabilize the market, especially around the central city work conference and the Politburo meeting in July [2][6] 3. **Valuation Recovery**: The real estate sector is experiencing a lag in valuation, indicating a potential for recovery or "catch-up" in prices [2][6] 4. **Conventional Policies**: Conventional measures such as relaxing purchase restrictions, adjusting down payment ratios, interest rate cuts, and tax incentives are available but may have limited effectiveness [3][4] 5. **Unconventional Policies**: Unconventional measures could include deep interest rate cuts, quantitative easing, and leveraging central government support, particularly targeting mortgage loans to stimulate demand [3][4] 6. **Urban Village Redevelopment**: The Ministry of Housing has proposed a plan for 1 million urban village redevelopment projects, primarily in first and second-tier cities, which could mobilize trillions in funding if fully implemented [5] 7. **Market Data Challenges**: The second quarter's market data has posed challenges to policy goals, leading to expectations of continued easing in Q3, with key trading windows in July and September [6][8] 8. **Macroeconomic Indicators**: The macroeconomic data for Q2 2025 shows a GDP growth rate exceeding 5%, with consumption and exports remaining stable, reducing the immediate need for aggressive policy easing [7] 9. **Investment Opportunities**: Companies with solid fundamentals such as Jiafa Technology, Xinjiang Group, and Beike are recommended for investment. Additionally, companies like Jianfa International and Binjiang Group are favored due to their inventory structure and quick turnover [9][10] 10. **Market Sentiment**: There is a cautious optimism regarding the trading rhythm in the coming months, with July and September identified as critical periods for market engagement [11] Other Important Insights - The potential for structural tools aimed at housing loans could significantly lower borrowing costs, enhancing homebuyer demand [4] - The issuance of special bonds or central government support could increase household loan limits, providing further market support [5] - Smaller companies with higher elasticity, such as Greentown, Yuexiu, and Jinmao, along with debt-restructuring firms, are also considered viable investment options [10]

Group 1 - The core viewpoint is that the real estate stocks in China have collectively risen, indicating a positive market response to new housing loan policies in Guangzhou [1] - R&F Properties (02777) increased by 6.86% to HKD 1.09, Aoyuan Group (03383) rose by 5.95% to HKD 0.445, Oceanwide Holdings (03377) went up by 4.65% to HKD 0.09, and Sunac China (01918) gained 4% to HKD 1.56 [1] - The Guangzhou Housing Provident Fund Management Center released a draft policy that aims to ease restrictions on housing loans, which is expected to provide a strong signal of market easing [1] Group 2 - According to data from the China Index Academy, the total sales of the top 100 real estate companies in the first half of 2025 amounted to CNY 183.64 billion, reflecting a year-on-year decline of 11.8% [2] - In June alone, the sales of the top 100 real estate companies dropped by 18.5% year-on-year, indicating a worsening trend compared to May [2] - Open Source Securities anticipates that the real estate policies will remain positive and moderate, with expectations for more supportive fiscal and monetary policies to aid the industry's stable development [2]

Core Viewpoint - Guangzhou is set to optimize its real estate policies by proposing the comprehensive cancellation of purchase restrictions, sales restrictions, price limits, and lowering loan down payment ratios and interest rates, marking a significant shift in the city's approach to real estate regulation [2][3][15]. Group 1: Policy Changes - The proposed plan includes the full cancellation of purchase restrictions, sales restrictions, and price limits, making Guangzhou the first major city to announce such comprehensive measures [2][3]. - The plan also aims to lower the down payment ratios and interest rates for loans, further easing the financial burden on homebuyers [10][16]. - The city has already begun to implement these changes, with significant policy relaxations occurring since the fourth quarter of 2023 [4][6]. Group 2: Market Impact - Since the fourth quarter of 2023, Guangzhou's real estate market has shown signs of recovery, with transaction volumes steadily increasing [6][12]. - In the first five months of 2024, the number of second-hand residential transactions reached 43,785, a 23.6% increase compared to the same period in 2023 [6]. - The net signed contracts for new residential properties also saw a 22% year-on-year increase, indicating a positive market trend [6]. Group 3: Future Outlook - Analysts predict that the comprehensive cancellation of restrictions will stimulate demand and enhance market activity, potentially leading to a stabilization of property prices [15][16]. - The ongoing urban renewal initiatives, including the renovation of old residential areas, are expected to further support property value retention and increase the supply of quality housing in central areas [12][17]. - The overall sentiment suggests that Guangzhou's real estate market is on a path to recovery, with expectations of continued moderate growth in transactions [14].

Core Viewpoint - The news highlights Guangzhou's proposal to cancel restrictions on home purchases, sales, and prices, signaling a shift towards a more relaxed real estate policy aimed at boosting consumer confidence and demand [1]. Group 1: Policy Changes - Guangzhou's Business Bureau has released a draft plan indicating the intention to gradually reduce consumption restrictions and optimize real estate policies, including the complete cancellation of purchase, sale, and price limits [1]. - The cancellation of these restrictions is not a new policy, as similar measures were already implemented in May and September 2024, with price limits effectively in place without formal documentation [1]. Group 2: Financial Adjustments - Current mortgage conditions in Guangzhou include a 15% down payment for both first and second homes, with a mortgage interest rate of 3% for commercial loans and 2.6% for public housing funds, indicating relatively low borrowing costs [1]. - There is potential for further reductions in the down payment ratio for public housing loans, which could enhance affordability for homebuyers [1]. Group 3: Urban Development Initiatives - The draft plan also emphasizes the importance of renovating urban villages and old residential areas, with a target to initiate over 150 old residential area renovations and update more than 9,000 old elevators by 2025, alongside a fixed asset investment of 100 billion yuan for urban village renovations [2]. - Accelerating urban village renovations is expected to stimulate housing demand, while utilizing special loans to purchase existing homes for resettlement purposes will help reduce inventory levels [2].

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [13]. Core Insights - The real estate sector is currently at a bottom range, with a significant downward trend in volume and price having likely passed. The industry is expected to see a policy trading window around mid-year, despite short-term policies not meeting market expectations [2][11]. - The adjustment phase of the industry has entered its second half, with the fastest decline in volume and price likely over. The core areas and quality properties present structural highlights [7][11]. - Continuous easing of industrial policies is anticipated, although the stabilization of the market remains fragile. The potential for further policy easing exists, including interest rate cuts and tax incentives [2][11]. Market Performance - The Yangtze River Real Estate Index decreased by 2.80% this week, with a year-to-date decline of 6.43%. The sector ranks low in performance relative to the broader market [8][16]. - In April, new home registrations in sample cities turned negative year-on-year, while second-hand home sales saw a decrease in growth rate [10][19]. Policy Developments - Recent policies include tax deductions for second-home loans transitioning to first-home loans, and various local governments have introduced new real estate measures to stimulate the market [9][18]. - Notable local policies include the introduction of housing vouchers in Nanjing and changes to housing fund regulations in Shanghai, aimed at increasing accessibility for non-residents [9][18]. Sales Data - In April, the new home transaction area in 37 cities saw a year-on-year decline of 7.5%, while second-hand homes experienced a year-on-year increase of 19.3% [10][19]. - The cumulative year-to-date transaction area for new homes in 37 cities is up by 0.9%, while second-hand homes have increased by 28.7% [10][19].