Investment Rating - Investment recommendation: Outperform the market (maintained) [9] Core Viewpoints - The real estate market continues to experience low-level fluctuations, with significant city-level differentiation. New home sales in 35 cities from January to July 2025 totaled 76.01 million square meters, a year-on-year decline of 10.8%. The decline has expanded by 1.4 percentage points compared to the first half of the year, with July alone seeing a year-on-year drop of 19.6% [4][10] - The second-hand housing market shows a slight increase in transaction volume, with 15 cities recording a year-on-year growth of 8.3% in the same period, although the growth rate has narrowed compared to the previous month. The average price of second-hand homes in July fell by 7.32% year-on-year [11][23] - The land market shows stabilization in transaction volume and price, with the average floor price of land transactions rising by 30.7% year-on-year. Core cities are witnessing record-high land prices, indicating sustained interest in prime locations [12][36] Sales Sector - New home sales: In the first seven months of 2025, new home transactions in 35 cities totaled 76.01 million square meters, down 10.8% year-on-year. The monthly transaction volume in July was 9.21 million square meters, a decline of 19.6% year-on-year. The market is expected to continue low-level fluctuations, with potential signs of recovery in core city projects [17][18] - Second-hand home sales: In the same period, second-hand home transactions in 15 cities reached 56.81 million square meters, up 8.3% year-on-year. However, July saw a 5.6% year-on-year decline in transaction volume, indicating a market adjustment phase [23][25] - Price trends: New home prices are showing structural growth, while second-hand home prices are declining. The average transaction price for new homes in July was 16,877 yuan per square meter, up 2.64% year-on-year, while second-hand homes averaged 13,585 yuan per square meter, down 7.32% year-on-year [28][29] Land Sector - Transaction volume and price: From January to July 2025, land supply in 300 cities was 13,006 million square meters, down 7.2% year-on-year, while total transactions reached 11,210 million square meters, up 2.3% year-on-year. The average floor price was 7,821 yuan per square meter, reflecting a 30.7% increase year-on-year [36][39] - City-level performance: In the first seven months, first-tier cities saw a 14.8% increase in land transaction volume, while second-tier cities increased by 17.5%. The average floor price in first-tier cities was 37,688 yuan per square meter, up 29.4% year-on-year [44][48] - Leading cities: Hangzhou led the land market with the highest land transfer fees and premium rates, indicating strong competition for quality land [48][50] Investment Recommendations - The report recommends focusing on leading real estate companies that are actively acquiring land in core urban areas, such as China Overseas Development, Greentown China, and others. These companies are expected to benefit from the recovery of quality projects in core cities [13][50]

Core Viewpoint - The real estate market is experiencing a significant structural divergence, with new homes underperforming while the second-hand housing market shows strong recovery, particularly in first-tier cities [1][11][12]. Group 1: Market Performance Post-Spring Festival - New home sales in 30 major cities showed a slight increase of 2.7% year-on-year in January-February 2025, but still down nearly 40% compared to 2023 [2]. - The second-hand housing market rebounded strongly, with sales in 13 major cities increasing by 48.9% year-on-year in January-February 2025, and achieving the highest sales volume in nearly five years [3][11]. - The average daily transaction volume for second-hand homes post-reopening approached the high levels seen in October and November of the previous year, indicating robust market activity [3]. Group 2: City-Level Performance Disparities - Market activity varies significantly between cities, with first-tier and some hot second-tier cities maintaining high sales momentum, while most second-tier and lower-tier cities remain sluggish [5][6]. - Cities like Beijing, Shanghai, and Shenzhen continue to show strong performance in both new and second-hand home markets, despite some year-on-year declines due to high base effects from the previous year [6][11]. - The recovery in second-hand home sales in lower-tier cities appears to be primarily driven by low base effects, with limited sustained momentum [5][11]. Group 3: Price Trends - Overall, the housing market has not yet fully recovered, with some first-tier cities showing signs of price stabilization after four months of positive growth [9][11]. - In second-tier cities, only Chengdu and Xiamen have seen consistent price increases, while most others are either declining or experiencing only temporary upswings [9][11]. Group 4: Future Outlook - Structural recovery is expected to dominate the market in the near term, with strong performance in second-hand homes in first-tier and strong second-tier cities [11][12]. - Long-term market improvement will depend on price stabilization and the effective supply of new homes, particularly in core areas where supply remains constrained [12].