China Property Weekly Wrap_ Week 10 Wrap - Primary sales weakened to kick-off March; housing market stability as _Two-Session_ key agenda

Summary of Goldman Sachs China Property Weekly Wrap (11 March 2025) Industry Overview - Industry: Chinese Property Market - Current Trends: The property market is experiencing a mixed recovery with government policies aimed at stabilizing the housing market and addressing economic risks. Key Highlights 1. Government Policy: The Government Work Report emphasizes "stabilizing the housing market" as a priority for 2025, focusing on preventing economic risks [1][1] 2. Inventory Buyback Flexibility: Local governments are granted more flexibility regarding acquisition entities, pricing, and usage of existing inventory buybacks [1][1] 3. Demand-Side Policies: Authorities are encouraging localities to reduce restrictive policies and expedite housing renovation programs [1][1] 4. Supply-Side Control: New land supply will be reasonably controlled, and efforts will continue to ensure project delivery and mitigate property developer debt defaults [1][1] Market Performance 1. Sales Volume: - New home sales volume decreased by 14% week-over-week (wow) but increased by 22% year-over-year (yoy) [5][5] - Secondary transactions increased by 1% wow and 37% yoy, indicating positive price expectations from homeowners [5][5] 2. Year-to-Date (YTD) Performance: - Primary Gross Floor Area (GFA) sold increased by 9% yoy but decreased by 24% compared to 2023 levels [5][5] - Secondary GFA sold increased by 18% yoy but decreased by 2% compared to 2023 levels [5][5] Market Sentiment 1. Agent Sentiment: The Centaline Salesman Index (CSI) was flat week-over-week but up by 11 percentage points from pre-easing levels [12][12] 2. Seller Sentiment: The Centaline Seller Asking Index (CAI) increased by 2 percentage points week-over-week and 5 percentage points from pre-easing levels [15][15] Inventory and Completions 1. Inventory Levels: Inventory decreased by 0.2% wow and 1.5% from the end of 2024, with inventory months at 26.0 [49][49] 2. Completions: The YTD GSPC tracker indicates a 20% yoy decline in completions for the first two months of 2025 [52][52] Regional Performance 1. Tiered City Performance: - Tier-1 cities saw a 22% decrease wow but a 34% increase yoy [22][22] - Tier-2 cities experienced a 17% decrease wow and a 25% increase yoy [26][26] - Tier-3 cities had a 14% decrease wow and a 19% increase yoy [30][30] Valuation Insights 1. Valuation Metrics: Offshore developers are trading at an average 30% discount to end-2025 estimated NAV, while onshore developers are at a 20% discount [60][60] 2. Price-to-Book (P/B) Ratios: The average P/B ratio for offshore coverage is 0.5X for 2025, indicating a downturn in valuations [60][60] Implications for Investors - The mixed signals from sales volumes, inventory levels, and government policies suggest a cautious approach to investment in the Chinese property market, with potential opportunities in specific regions and segments [7][7]