16 June 2025 | 12:26PM HKT China: 70-city average primary property prices fell further in May Bottom line: The National Bureau of Statistics' 70-city house price data suggest the weighted average property price in the primary market fell by 2.4% mom annualized in May after seasonal adjustments. The widening in sequential decline of house prices was broad-based across all city tiers. We emphasize the 70-city data are for primary market transactions (new home sales) only; secondary market data by NBS and some ...

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The Chinese economy is facing simultaneous challenges from a declining property sector and escalating US-China trade tensions, which are expected to weaken the property market further, particularly in tier-one cities [1][2] - The Emerging Industries PMI (EPMI) has significantly dropped, indicating a bleak outlook for growth post-Q1, with expectations of a decline in the official manufacturing PMI [2] - Local governments' land sales revenues have deteriorated, reflecting ongoing fiscal challenges [3][4] Summary by Sections Economic Overview - New home sales in major cities are declining at a double-digit rate, with no signs of stabilization in the housing sector [1] - The EPMI fell by 10.2 percentage points to 49.4 in April, indicating a contraction in emerging industries [2] Fiscal Revenue and Expenditure - On-budget fiscal revenue growth improved slightly to 0.3% year-on-year in March, while tax revenue growth showed signs of recovery [3] - Local governments' land sales revenues worsened to -16.3% year-on-year in March, indicating ongoing fiscal stress [4] - On-budget fiscal expenditure growth accelerated to 5.7% year-on-year in March, driven by increased government bond issuance [5] Property Market Dynamics - Growth in property-related tax revenues improved to -0.1% year-on-year in March, but local governments' land sales revenues continued to decline [4] - New home sales volume in major cities showed a modest improvement, with tier-one cities experiencing a decline of -10.1% year-on-year [11] Trade and Shipping - Container throughput at major ports increased by 10.3% year-on-year, while cargo throughput rose by 5.1% year-on-year [11] - The China Containerized Freight Index (CCFI) increased by 1.4% from the end of March, indicating a mixed trend in shipping costs [11]

Investment Rating - The report indicates a negative trend in the primary property market, with a weighted average property price decrease of 2.2% month-over-month annualized in March, following a decline of 2.6% in February [2][8]. Core Insights - The divergence in property prices between top-tier and lower-tier cities continues, with Tier-1 cities experiencing a sequential increase of 0.5% month-over-month annualized in March, while Tier-2 and Tier-3 cities saw declines of 1.5% and 4.2% respectively [8][14]. - Year-on-year changes in the weighted average new home prices fell to -4.5% in March from -4.8% in February, indicating ongoing challenges in the property market despite easing policies [8][12]. - The report highlights that secondary market data suggests price declines of 5%-15% over the past year, further emphasizing the struggles faced by the property sector [8][12]. Summary by Sections Primary Market Performance - The weighted average property price in the primary market decreased by 2.2% month-over-month annualized in March, with a year-on-year decline of 4.5% [2][8]. - The number of cities with sequentially higher property prices increased in both primary and secondary markets in March, indicating some localized recovery [8][15]. Tier Classification - Tier-1 cities showed resilience with a 0.5% increase in property prices, while Tier-2 and Tier-3 cities faced declines of 1.5% and 4.2% respectively [8][14]. - The report suggests that lower-tier cities are facing stronger headwinds due to weaker growth fundamentals and oversupply issues compared to top-tier cities [8][12]. Policy and Market Outlook - Policymakers have intensified housing easing efforts since September, which have been more effective in stabilizing secondary home prices than previous measures [12]. - Continued housing easing measures are expected to stabilize home prices and secure the delivery of pre-sold homes, including potential cuts to mortgage rates and expanded bank lending [12][19].