Summary of Real Estate Market Conference Call Industry Overview - The real estate market in October 2025 faced significant pressure, with the sales amount of the top 100 real estate companies declining by 16% year-on-year [1][2] - The new housing supply in 30 key cities decreased by 21% year-on-year and 51% month-on-month, indicating weakened willingness from developers to launch new projects [1][5] - The overall market sentiment remains low due to insufficient policy support, with expectations of further declines in November and December [1][6] Key Points and Arguments Sales Performance - In October 2025, the sales amount for the top 100 real estate companies was 253 billion yuan, marking a 41.9% year-on-year decline, the largest monthly drop of the year [2][3] - Among the top 100 companies, 48 reported month-on-month growth, with 20 companies showing increases greater than 30% [3] - The top three companies experienced a 43.4% decline year-on-year, while the cumulative sales for the first ten months of 2025 were 2.58 trillion yuan, down 16% [3][4] New Housing Supply and Demand - The average new housing absorption rate in 30 key cities was only 37%, with first-tier cities like Beijing and Shanghai around 30% [9] - New homes in second-tier cities are being priced 10%-20% lower than surrounding second-hand homes, attracting some first-time and upgrade buyers [14] - The demand for mid-range housing (200-300 million yuan) remains concentrated in the second-hand market, as new homes do not meet this price point [15] Inventory and Market Dynamics - Despite a significant drop in new supply, overall inventory remains high, with two-thirds of key cities having a digestion cycle exceeding 18 months [12] - The second-hand housing market is experiencing accelerated declines, with a 11% month-on-month drop, contrasting with a slight increase in new homes [11] Land Market Trends - The land transaction volume in October saw a year-on-year decline of 33%, with the average premium rate dropping to a new low [16][17] - Land acquisition is increasingly concentrated in core cities, with over 70% of land purchases by the top ten companies [18] Future Market Expectations - The real estate market is expected to continue its low-level fluctuations into 2026, with further declines anticipated [19] - The sales pressure on mid-range housing products is expected to increase, as buyers have flexible timelines for their purchases [19] Policy and Regulatory Environment - The push for current housing sales policies is still in the proposal stage, with no immediate implementation expected [21] - The recent launch of 59 urban village renovation projects in Shanghai, with an investment of approximately 370 billion yuan, may provide short-term demand stimulation but could lead to future supply-demand imbalances [22] Additional Important Insights - The high-end buyer segment, particularly those purchasing luxury homes over 40 million yuan, remains less affected by market fluctuations due to their financial stability [13] - The overall environment for both new and second-hand homes is not expected to improve significantly, with ongoing competition between new and old housing affecting market dynamics [20]

Core Viewpoint - The economic growth in the third quarter is supported by short-term factors and medium-term resilience, maintaining reasonable growth [2][8][42] GDP - The GDP growth rate for the third quarter is 4.8%, matching expectations, with contributions from service consumption, improved external demand, and strong construction activity [2][44] - Service consumption remains resilient, contributing 2.7 percentage points to GDP [2][8] - External demand has improved, with net exports contributing 1.2 percentage points to GDP [2][8] - Construction activity surged in September, with a 22.9% increase, boosting property sales and supporting capital formation in GDP [2][8] Production - Industrial value-added growth increased to 6.5% in September, driven by specific industries like automotive production [2][13] - The automotive sector saw a 7.6% increase in value-added, contributing to an overall production growth of 0.4% [2][13] - Downstream production showed significant improvement, while upstream production remained weak due to declining investments [2][14] Retail Sales - Retail sales below the quota showed a decline, but service consumption continued to grow at a rate of 5.2% [3][20] - Retail sales of automobiles improved due to anticipated adjustments in subsidy policies, while home appliances saw a decline [3][20] - The overall retail sales growth in September was 3.0%, down 0.4 percentage points from the previous month [3][20] Real Estate - The "guarantee delivery" and "existing home sales policy" have been implemented, leading to a significant increase in construction activity [3][24] - Property prices in 70 cities showed a slight year-on-year increase, but still negative on a month-on-month basis [3][24] - The construction growth rate surged to 1.5% in September, driven by policy support [3][24] Investment - Fixed asset investment growth remains low, with a year-on-year decline of 6.5% in September [4][33] - Other expenses saw a significant increase, while construction and installation investment dropped sharply [4][33] - The acceleration of debt repayment has occupied funds for fixed investment, contributing to the ongoing decline in investment growth [4][33] Summary - Economic pressures are increasing, but policies are actively countering these effects, with expectations for resilience in the fourth quarter [4][42] - Short-term factors like "production rush" may fade, leading to potential downward pressure on industrial production [4][42] - The implementation of 500 billion yuan in local special bond quotas is expected to alleviate the impact of debt repayment on fixed asset investment [4][43]

Economic Performance - Q3 GDP growth was 4.8%, matching expectations but down from 5.2% in the previous quarter[1] - In September, industrial added value increased by 6.5%, exceeding the expected 5.2%[1] - Fixed asset investment showed a cumulative year-on-year decline of 0.5%, against an expectation of 0%[1] Consumption and Retail - Retail sales in September grew by 3.0%, slightly below the expected 3.1%[1] - Service consumption remained resilient, with service retail growth rising by 0.1 percentage points to 5.2%[3] - Below-limit retail sales weakened, dropping by 0.5 percentage points to 3.8%[3] Investment Trends - Fixed asset investment in September saw a slight recovery, up 0.7 percentage points to -6.5% year-on-year[4] - Real estate development investment continued to decline, with a cumulative year-on-year drop of 13.9%[4] - Manufacturing investment showed a slight increase, with a monthly year-on-year growth of -1.5%[4] Real Estate Market - The completion rate surged by 22.9 percentage points in September, reaching 1.5%[3] - New housing sales area saw a year-on-year decline of 5.5%[1] - Housing prices in 70 cities showed a slight recovery, but remained negative on a month-on-month basis[3] Outlook and Risks - Economic pressures are increasing, but policies are actively countering these effects, suggesting resilience in Q4[4] - Potential risks include external environment changes and slower-than-expected implementation of growth stabilization policies[4]

Investment Rating - The industry rating is maintained as "Recommended" indicating a positive outlook for the industry fundamentals and expectations for the industry index to outperform the benchmark index [6]. Core Insights - The report highlights that the cumulative land transaction area from January to September 2025 has seen a narrowing year-on-year decline, with a decrease of 9% compared to the previous year, while the average transaction price has increased by 17% [23][30]. - The new housing market is expected to show signs of improvement earlier than the second-hand housing market due to supply contraction expectations and quality optimization [4]. - The report emphasizes the importance of the net rental yield and mortgage rate spread as key indicators for total demand in the housing market [4]. Summary by Sections New Housing Market - The new housing contract area has seen a year-on-year decline of 32%, which has widened by 29 percentage points compared to September [3]. - The average daily contract area for new homes is below the levels seen in the past four years [21]. Second-Hand Housing Market - The second-hand housing contract area has increased by 4% year-on-year, but this growth has narrowed by 10 percentage points compared to September [3]. - The average daily contract area for second-hand homes is also below the levels seen in the past four years [21]. Land Acquisition - The report indicates that the cumulative land transaction area has decreased by 9% year-on-year, while the average transaction price has increased by 17% [23][30]. - The land premium rate has decreased by 1.1 percentage points compared to the previous month [29]. Market Liquidity - The liquidity outlook indicates a tightening trend at the macro level, with a narrowing of the year-on-year easing [4][50]. - The proportion of listings with price increases has decreased from 5.8% to 5.6%, reflecting a year-on-year decline of 14.6% [51]. Inventory and Sales - The report notes that the unsold inventory and the cycle for unsold new launches have increased compared to July, indicating a need for monitoring [33][36].

Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for the sector's fundamentals and expectations for the industry index to outperform the benchmark index [6]. Core Insights - The report highlights that the year-on-year decline in the area of second-hand housing contracts has narrowed, while the decline in new housing contracts has expanded. This reflects a mixed performance across different city tiers [4][8]. - The analysis suggests that the net rental yield and mortgage rate differential is a key observation point for total demand in both new and second-hand housing markets. It emphasizes the potential for earlier improvement in the new housing market compared to the second-hand market due to supply contraction and quality optimization [4]. - The report also notes that the current price-to-book (PB) ratio for the sector is approximately 1.0 times, which reflects concerns about the impact of current housing sales on business models. It suggests that the sector has entered an investment range, with leading companies showing an average PB of about 0.7 times [4]. Summary by Sections New Housing Contracts - The year-on-year decline in new housing contracts has expanded, with a notable decrease of 22% across sample cities, which is a worsening of 3 percentage points compared to July [3]. - The report indicates that the new housing contract area is at a low level compared to the same period over the past five years [8]. Second-hand Housing Contracts - The year-on-year decline in second-hand housing contracts has narrowed to 1%, showing an improvement of 6 percentage points compared to July [3]. - The report states that the average number of viewings for second-hand homes in 12 sample cities has decreased by 0.4 percentage points month-on-month, while the year-on-year increase has expanded by 3.0 percentage points [4][42]. Land Transactions - The cumulative area of land transactions from January to July 2025 has seen a year-on-year decline of 6%, with the average transaction price increasing by 32% [23]. - The report notes that the land transaction volume and average price trends indicate a tightening market, with a decrease in the proportion of properties with rising listing prices [4][48]. Inventory and Supply - The report highlights a decrease in the unsold inventory of new housing, indicating a potential improvement in the market dynamics [32]. - It also mentions that the unsold inventory cycle for new housing has decreased compared to June, suggesting a tightening supply situation [32].

Investment Rating - The industry maintains a "Recommended" rating, indicating a positive outlook for the industry fundamentals and expectations for the industry index to outperform the benchmark index [7]. Core Insights - The report highlights that the year-on-year decline in new housing and second-hand housing transaction areas has narrowed, with new housing transactions down by 17% and second-hand housing down by 2% as of August 14, 2025 [4][9]. - The report emphasizes the importance of the difference between net rental yield and mortgage rates as a key observation for total demand in the new and second-hand housing markets [5]. - It suggests that the new housing market may see improvements earlier than the second-hand market due to expectations of reduced supply and enhanced quality [5]. - The report also notes that the current price-to-book (PB) ratio for the sector is approximately 1.0, reflecting concerns about the impact of current housing sales on business models, indicating that the sector has entered an investment range [5]. Summary by Sections New Housing Transactions - The year-on-year decline in new housing transactions has narrowed, with a decrease of 17% compared to the previous year, while the month-on-month figures are at a low level compared to the past five years [9][11]. - The report indicates that the average daily transaction area for new and second-hand housing is below the levels of the same period in previous years [19]. Second-Hand Housing Transactions - The year-on-year decline in second-hand housing transactions has also narrowed, with a decrease of 2% as of August 14, 2025 [4][14]. - The report notes that the transaction area for second-hand housing is at a mid-level compared to the past five years [17]. Land Acquisition - The cumulative land transaction area from January to July 2025 has seen a year-on-year decline of 6%, while the average transaction price has increased by 32% [21]. - The report highlights that the land premium rate has increased by 2.0 percentage points compared to the previous month [27]. Inventory and Unsold Properties - The report indicates that the unsold inventory and the de-stocking cycle for newly started projects have decreased compared to June, suggesting a slight improvement in inventory management [30][33]. - The de-stocking cycle for unsold properties has shown mixed trends across different city tiers, with first-tier cities experiencing a decrease in unsold inventory [33].

Investment Rating - The report maintains a "Recommendation" rating for the real estate industry [1] Core Insights - The land premium rate in 300 cities increased in July compared to June, indicating a potential recovery in the real estate market [1] - The report highlights that the total demand for new and second-hand homes is stabilizing, driven by the narrowing gap between net rental yields and mortgage rates [5] - It emphasizes the importance of supply reduction expectations and the optimization of supply quality in improving the new housing market environment compared to the second-hand market [5] Summary by Sections New Housing Market - The year-on-year decline in new housing contract signing area has expanded, with a 19% decrease in sample cities compared to June [3] - The average contract signing area in first-tier cities saw a 22% year-on-year decline, while second-tier cities experienced a 13% decline [3][9] Second-Hand Housing Market - The year-on-year decline in second-hand housing contract signing area also expanded, with a 7% decrease in sample cities [3] - First-tier cities reported a 9% year-on-year decline in second-hand housing, marking a shift to negative growth [3][13] Land Transactions - From January to July 2025, the cumulative land transaction area in 300 cities saw a year-on-year decline of 6%, while the average transaction price increased by 32% [21] - The land premium rate increased by 2.0 percentage points compared to the previous month, indicating a potential recovery in land sales [27] Market Liquidity and Pricing Trends - The liquidity outlook indicates a tightening trend as of August 2025, with a reduction in the proportion of listings with price increases [5][44] - The average number of viewings for second-hand homes in 12 sample cities decreased by 8.7% compared to June [41] Future Outlook - The report suggests that the real estate sector is entering an investment zone, with the price-to-book (PB) ratio around 1.0, reflecting concerns about the impact of current sales on business models [5] - It identifies three main lines of risk premium recovery for national and regional real estate companies, focusing on balance sheet performance, credit premiums, and turnaround situations [5]

Core Insights - The report indicates a decrease in the unsold inventory turnover cycle for new construction in June compared to May, suggesting a potential improvement in market conditions [1] - The overall net signed area for new and second-hand homes has shown a year-on-year decline, with the rate of decline for new homes at -22% and for second-hand homes at -9% as of July 17 [4][10] - The report highlights a significant drop in the average number of viewings for second-hand homes, which decreased by 8.3% month-on-month, indicating a shift in market dynamics [5][46] New Home Market - The year-on-year decline in new home signed area has expanded, with the current figures being higher than the levels seen in the past four years [10][12] - The report notes that the average signed area for new homes in sample cities has decreased compared to the same period last year, reflecting ongoing market challenges [12][20] Second-Hand Home Market - Similar to new homes, the second-hand home market has also experienced an expanded year-on-year decline in signed area, with the current figures indicating a more significant contraction [14][16] - The report emphasizes that the average signed area for second-hand homes is also below the levels recorded in previous years, suggesting persistent market weakness [16][20] Land Acquisition - The cumulative land transaction area from January to June has shown a year-on-year decline of 5%, but the average transaction price has increased by 33% compared to the previous year [22][28] - The report indicates that the land acquisition data includes residential, comprehensive, and commercial/office land, providing a comprehensive view of market activity [25][32] Inventory and Turnover - The report notes that the inventory of unsold new construction and the turnover cycle have marginally decreased compared to May, while the inventory of unsold projects has increased [33][35] - The turnover cycle for unsold new construction has decreased, indicating a potential improvement in market absorption rates [35][36] Forward-Looking Indicators - The report suggests that liquidity conditions are expected to improve, with macro-level liquidity showing signs of expansion as of July 2025 [5][49] - The proportion of listings with price increases has decreased by 8.8% month-on-month, indicating a potential cooling in price expectations across the market [51][53]

Investment Rating - The report maintains a "Recommended" investment rating for the industry [1] Core Insights - The report highlights a significant year-on-year decline in both new and second-hand housing transaction areas, with the decline rate expanding [2][10] - The report indicates that the overall demand for new and second-hand homes may stabilize due to potential decreases in mortgage rates, which could narrow the gap between net rental returns and mortgage rates [6] - The report emphasizes the importance of urban renewal and the optimization of existing policies to stabilize the real estate market [6] Summary by Sections New Housing Transactions - The year-on-year decline in new housing transaction areas has expanded, with a reported decrease of 24% for sample cities [4] - The decline in new housing transactions is more pronounced in first-tier cities, with a 21% decrease [4][10] Second-Hand Housing Transactions - The year-on-year decline in second-hand housing transaction areas has also expanded, with a reported decrease of 10% for sample cities [4] - First-tier cities have seen a shift to negative growth in second-hand housing transactions, with a 10% decline [4] Market Trends and Indicators - The average number of viewings for second-hand homes in 12 sample cities has decreased by 8.3% month-on-month [5][45] - The liquidity outlook indicates an expansion in macro-level liquidity as of July 2025 [5][49] Land Acquisition - The cumulative land transaction area from January to June 2025 has seen a year-on-year decline of 5%, while the average transaction price has increased by 33% [24] - The report notes a decrease in the proportion of listings with price increases, indicating a potential cooling in market expectations [50] Inventory and Unsold Properties - The report indicates a marginal increase in the unsold inventory cycle for newly acquired and unsold properties compared to April [34] - The unsold inventory cycle for newly constructed properties in first-tier cities has decreased, while it has increased in second and third-tier cities [36]

Investment Rating - The industry rating is maintained as "Recommended" indicating a positive outlook for the industry fundamentals and expected outperformance of the industry index against the benchmark index [7]. Core Insights - The report highlights that the average land acquisition price in sample cities has increased year-on-year, with a notable expansion in the growth rate compared to previous months [1]. - The new housing and second-hand housing transaction areas have shown a year-on-year decline, with the decline in new housing transactions expanding significantly [9][15]. - The report emphasizes the potential for a recovery in demand for new and second-hand homes due to anticipated decreases in mortgage rates, which could narrow the gap between net rental returns and mortgage rates [5]. Summary by Sections New Housing Transactions - As of July 3, the year-on-year decline in new housing transactions in sample cities is -34%, which is a worsening of 21 percentage points compared to June [3]. - The new housing transaction area in first-tier cities has seen a year-on-year decline of -41%, while second-tier cities have a decline of -19% [3]. Second-Hand Housing Transactions - The year-on-year decline in second-hand housing transactions is -9%, with a worsening of 5 percentage points compared to June [3]. - First-tier cities have experienced a shift to negative growth in second-hand housing transactions, indicating a more challenging market environment [3]. Land Acquisition Trends - In the first half of 2025, the cumulative land transaction area in 300 cities has seen a year-on-year decline of -5%, while the average transaction price has increased by 33% [23]. - The report notes that the land premium rate has decreased by 0.3 percentage points compared to the previous month, indicating a potential cooling in land market speculation [29]. Market Outlook - The report suggests that the real estate market stability remains a key policy goal, with a focus on urban renewal and the optimization of existing policies [5]. - The anticipated recovery in the housing market is expected to be driven by a combination of supply reduction, improved quality of supply, and significant differentiation in buyer profiles [5].