Investment Rating - The report maintains a "Positive" investment rating for the real estate industry in China [7] Core Insights - The report presents a contrarian view, suggesting that while there are expectations for a market turning point due to declining listings and stabilizing prices in core cities, further observation is necessary. The improvement in the housing market is attributed to specific factors, including seasonal demand and policy expectations, particularly in Shanghai [2][3] - The government’s policy direction remains focused on risk prevention, safeguarding livelihoods, and reducing financialization in the real estate sector. Despite expectations for a new round of large-scale real estate stimulus, the report indicates that substantial changes in policy are unlikely [3] - The introduction of the "Shanghai Seven Measures" has significantly lowered entry barriers for first-time homebuyers, indicating a shift from inventory reduction to demand expansion in Shanghai's housing market. This policy is expected to stimulate market recovery, particularly in the context of seasonal demand [4] Summary by Sections Market Performance - The real estate sector has shown a weekly increase of 0.61%, with Hong Kong-listed property companies outperforming the Hang Seng Index by 3.62% [14][19] - Individual stock performance highlights include a 12.72% increase for Black Peony in A-shares and a 7.59% increase for Sun Hung Kai Properties in H-shares [19][22] Second-hand Housing Weekly Tracking - The average listing price in first-tier cities has seen a slight week-on-week decline of 0.11%, while the number of listings has increased by 0.36% in first-tier cities, aligning with seasonal trends [24][30] - Transaction volumes for second-hand homes have shown significant recovery since the Spring Festival, with first-tier cities like Beijing, Guangzhou, and Shenzhen experiencing a year-on-year increase of 104% [38][53] New Housing Weekly Tracking - New home sales have rebounded post-Spring Festival, with a year-on-year increase of 41.35% in ten sample cities, although Shanghai and Shenzhen saw declines of 3.2% and 40% respectively [62] - The inventory of new homes in first-tier cities has decreased by 0.4% week-on-week, indicating a tightening market [64][67] Investment Recommendations - The report suggests that investors should focus on local state-owned enterprises and nationally strong real estate companies in Shanghai and other first-tier cities, as these are expected to benefit from ongoing policy easing and market stabilization [6]

Core Viewpoint - The current adjustment in the real estate cycle has lasted over four years, and with recent changes in supply and policy, it is believed that housing prices in Beijing and Shanghai are likely to stabilize this year, indicating a gradual beta market for the real estate sector [1][34]. Group 1: Market Conditions - The core reason for the current real estate cycle adjustment is inventory, particularly the inventory of second-hand homes, which directly affects marginal pricing [2][7]. - The downward trend in the number of second-hand homes listed for sale in Beijing and Shanghai since the second half of 2025 has led to a return to a reasonable inventory cycle, suggesting that housing prices may stabilize [2][16]. - The recent decline in listing volumes is attributed to a decrease in the willingness to sell rather than an acceleration in transactions, indicating a natural bottoming out of social inventory [21][34]. Group 2: Policy Changes - The policy environment has shifted to emphasize "de-inventory," with potential for unexpected progress in housing stockpiling, such as the pilot program for second-hand home stockpiling in Shanghai [2][23]. - Adjustments to purchase restrictions in Beijing and Shanghai, although moderate, may act as catalysts for positive price expectations in the context of stabilizing social inventory [2][23]. Group 3: Inventory Dynamics - The inventory level is a key variable in predicting housing price trends, with the second-hand home inventory being particularly critical [8][12]. - The current high inventory issue is more complex than in previous cycles, with both second-hand and new homes contributing to the problem [10][12]. - The second-hand home inventory is expected to determine marginal pricing, and monitoring the inventory cycle is essential for understanding market dynamics [12][34]. Group 4: Investment Strategies - Investors are advised to consider three types of investment strategies: 1) allocate to stable assets with clear beta characteristics; 2) invest in structurally growing real estate development companies with strong product capabilities and high-quality inventory; 3) identify opportunities in private enterprises that may experience significant revaluation due to oversold valuations [1][35]. Group 5: Future Outlook - The real estate sector is expected to transition from a policy-driven environment to a beta market, with core city housing prices potentially leading to a gradual recovery in the sector [36][34]. - The average discount of market value to revalued net asset value (RNAV) for key covered real estate companies is currently 37%, indicating potential for significant valuation recovery [36].

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [7] Core Insights - The report highlights a divergence from market expectations regarding the recent stabilization in property prices and listing volumes in core cities, suggesting that further observation is necessary before concluding a cyclical turning point [2][3] - It emphasizes that the government's policy direction remains focused on risk prevention, safeguarding livelihoods, and reducing financialization in the real estate sector, despite market anticipations for a major policy shift [3] - The report identifies key events, particularly the strong performance of Hong Kong property stocks, driven by a bottoming out of the Hong Kong real estate market and supportive factors such as rental yields exceeding mortgage costs [4] Summary by Sections Market Performance - The Hong Kong property index has outperformed the Hang Seng Index, while the A-share real estate sector experienced a weekly decline of 0.69% [14][19] - Individual stock performance shows notable gains, with 京能置业 (Jingneng Real Estate) rising by 14.44% [20] Second-hand Housing Weekly Tracking - National listing prices in 85 cities have shown a slight week-on-week increase of 0.1%, with a recovery in the number of cities experiencing price rebounds [25] - The listing volume has decreased by 0.22% week-on-week, but the rate of decline has narrowed [29] - During the Spring Festival, the average daily transaction volume in 16 cities increased by 23% year-on-year, with significant growth in Beijing, Guangzhou, and Shenzhen [36] New Housing Weekly Tracking - The average daily transaction volume for new homes during the Spring Festival saw a year-on-year decline of 48.66%, with only 青岛 (Qingdao) and 济南 (Jinan) reporting increases of 148.17% and 9.84%, respectively [54] - The total inventory of new homes has slightly decreased, with a week-on-week decline of 0.1% [56]

Investment Rating - The report maintains a "Positive" investment rating for the real estate industry [6] Core Viewpoints - The report presents a contrarian view, suggesting that while there is market anticipation for a cyclical turning point due to recent price stabilization and reduced listings in core cities, further observation is necessary. Key cities like Shanghai and Shenzhen still face significant pressure, and the recent market improvements are attributed to specific factors such as seasonal demand shifts and policy expectations [2][3] - The government’s policy direction remains focused on risk prevention, safeguarding livelihoods, and reducing financialization in the real estate sector. Despite expectations for a major policy shift, the report indicates that the fundamental approach has not changed significantly [3] - The report highlights that the real estate sector has shown stronger performance than the broader market, driven by policy easing expectations and improvements in core city markets. It suggests that investors should actively participate in the sector, especially in the short term, while remaining cautious about long-term fundamentals [5] Market Performance - The A/H real estate sector has outperformed the market, with A-shares showing a weekly excess return of 1.34% against the CSI 300 index [11] - In the A-share market, stocks like JingTuo Development led gains with a weekly increase of 23.72% [17] - The Hong Kong property sector indices have also outperformed the Hang Seng Index, with notable gains in companies like Contemporary Land [15][18] Second-hand Housing Weekly Tracking - There has been a marginal improvement in listing prices in major cities, with Shanghai showing a rebound of 0.2% since January 18, 2026 [20] - The listing volume in first-tier cities has decreased significantly, with Shanghai experiencing a year-on-year decline of 20.08%, while Shenzhen saw an increase of 107.38% [24] - As the Spring Festival approaches, transaction volumes in major cities have turned negative, with declines of 26.54% in Guangzhou and 27.61% in Shenzhen [38] New Housing Weekly Tracking - The market is entering a "pre-holiday silence" period, with overall transaction volumes in the top ten cities declining by 14%, although Shanghai's new home transactions increased by 23% [56] - Total inventory has slightly decreased, with first-tier cities showing a more significant reduction. The average de-stocking period has lengthened seasonally, particularly in second-tier cities [58]