China Property Weekly Wrap_ Week 45 Wrap - Primary sales fell amidst cooling new home search activities and curtailed new supply

Summary of Goldman Sachs China Property Weekly Wrap Industry Overview - The document focuses on the China Property market, specifically analyzing trends in primary and secondary property sales, market sentiment, and inventory levels. Key Highlights 1. Primary Sales Decline: Primary sales fell by 25% month-over-month (mom) and 59% year-over-year (yoy), reaching levels just above those seen in February 2024 [3][11][20]. 2. Easing Impact Tracker: The easing impact tracker indicates that over the past six weeks, primary and secondary volumes recorded declines of 29% and increases of 1% week-over-week (wow), respectively. Primary sales were 40% below the average of prior easing peaks, while secondary sales were 15% above [3][11][13]. 3. New Home Sales: New home sales volume averaged a 17% decline wow but showed a 24% increase yoy, with tier-3 cities and the Yangtze River Delta (YRD) outperforming [3][11][20]. 4. Secondary Transactions: Secondary transactions increased by 3% wow and 43% yoy, reflecting stronger price appreciation expectations from agents and homeowners [3][11][23][24]. 5. New Home Search Demand: The new home search demand heat index softened by 2% wow and was 1% below pre-easing levels [3][11][14]. 6. Inventory Levels: Inventory levels increased by 0.2% wow but were down 9% from the end of 2023, with inventory months at 25.8 [3][11][31]. Market Sentiment 1. Homebuyer Sentiment: The Centaline Salesman Index (CSI) improved by 2.5 percentage points (pp) wow and 11.7pp yoy, indicating a more positive outlook among agents [3][11][28]. 2. Homeseller Sentiment: The Centaline Seller Asking Index (CAI) increased by 1.1pp wow and 11.7pp yoy, suggesting sellers are more optimistic about pricing [3][11][28]. Completions and New Starts 1. Completions: The GSPC tracker indicates a 20% yoy decline in completions for October 2024, with a projected 13% decline for the full year [7][35]. 2. New Starts: New starts are expected to decline by 20% yoy in October, consistent with trends observed in September [7][35]. Valuation Insights 1. Valuation Discounts: Offshore developers are trading at an average 26% discount to end-2025 estimated net asset value (NAV), while onshore developers are at a 5% discount [39][40]. 2. Price-to-Book Ratios: The average price-to-book (P/B) ratio for offshore coverage is 0.5X 2025E P/B, compared to historical troughs [39][40]. Conclusion The China property market is experiencing significant challenges, with declines in primary sales and completions, although secondary market activity shows some resilience. Market sentiment is cautiously optimistic, reflected in improved indices for both buyers and sellers. Valuation metrics indicate a substantial discount for developers, suggesting potential investment opportunities amidst the downturn.