Group 1: Core Conclusions - The report presents three key thoughts on the current real estate dilemma, emphasizing that the existing supply exceeds demand, making "net supply" reduction crucial for stabilizing the market [2] - The report highlights that second-hand housing prices provide stronger guidance and leading signals compared to new housing prices, which can be understood from the perspectives of supply, demand, price, and policy [2] - It stresses the importance of recognizing the tail risks associated with the current real estate adjustment, particularly concerning developers, homebuyers, and banks, indicating potential risks may concentrate on banks, especially smaller banks [2] Group 2: Policy Recommendations - Four feasible policy measures are suggested to reduce net supply: optimizing land acquisition, revitalizing distressed and idle properties for public service needs, accelerating the replacement of aging housing, and allowing market forces to phase out "ghost town" housing in lower-tier cities [2] Group 3: Industry Performance Insights - The report provides insights into industry performance, noting that the defense and military industry showed a 59.9% increase over the past year, while the non-ferrous metals sector increased by 103.4% [1] - It also indicates that the banking sector experienced a decline of 2.3% in January, with a modest annual growth of 6.3%, reflecting ongoing challenges in the financial landscape [1]

Group 1: Market Conditions - The current real estate market is characterized by an oversupply, with a significant increase in the "套户比" (household-to-unit ratio), which rose from approximately 1.06 in 2020 to about 1.17 in 2023[2][11][16] - As of November 2025, the total inventory of unsold residential properties includes 1.592 billion square meters of properties under construction and 394 million square meters of completed but unsold properties, indicating a high level of existing inventory[2][25][30] - The average decommissioning period for unsold properties under construction is 2.12 years, while for completed properties, it is 1.63 years, both remaining at historically high levels[2][25][31] Group 2: Policy Recommendations - To stabilize the real estate market, it is crucial to reduce "net supply" through four key policy measures: optimizing land acquisition, revitalizing idle properties for public services, accelerating the replacement of aging housing, and allowing market forces to eliminate ineffective supply in lower-tier cities[1][5][33] - The government has proposed to acquire idle land and existing properties, with plans to store approximately 2.63 million square meters of land, valued at around 676.5 billion yuan, to improve supply-demand dynamics[33][36] Group 3: Price Trends - Second-hand housing prices are seen as more indicative and lead the market compared to new housing prices, reflecting real demand and market sentiment more effectively[6][19] - The current market is in a phase where new housing prices are stabilizing, but the pressure from existing inventory continues to dominate, indicating that a true price stabilization may require a faster clearance of second-hand housing stock[6][19] Group 4: Risk Assessment - The real estate sector faces significant tail risks involving developers, homebuyers, and banks, particularly with small and medium-sized banks under pressure from potential asset quality deterioration due to falling property prices[7][19] - Developers are primarily at risk from liquidity issues and asset impairment, while homebuyers face risks from shrinking asset balances and potential social stability concerns[7][19]