BEKE(US:BEKE)2026-01-26 02:49Summary of Key Points from the Conference Call Industry Overview - Industry: China Property Market - Survey: UBS Evidence Lab's China Housing Survey conducted with 2,500 respondents from October 28 to November 18, 2025 Core Insights - Subdued Purchase Intention: There is a weakened intention to buy property in tier 1 and 2 cities, with intentions dropping from 23% to 21% in tier 1 and from 31% to 11% in tier 2 cities. Conversely, tier 3 cities saw an increase from 44% to 67% [2][10] - Price Decline: Average property prices in tier 1 cities have declined by 6% compared to initial purchase prices, contributing to a higher percentage of respondents reporting paper losses on properties [2][22] - Increased Selling Pressure: The intention to sell properties has risen from 10% to 17%, indicating more pressure in the secondary market [16] - Secondary Listings Growth: Secondary listings in 50 cities increased by 11% YoY as of December 2025, suggesting a growing expectation of price declines [2][16] Factors Influencing Confidence - Boosting Factors: The top three factors that could enhance household confidence in purchasing properties are lower mortgage rates, job promotions/salary increments, and lower down-payment requirements [3][67] - Completion Risk: Concerns about incomplete construction remain a significant factor diminishing confidence, alongside sluggish economic growth and high down-payment requirements [3][71] Macro Economic Implications - Weak Sentiment: Overall sentiment remains weak, with expectations for further property price declines likely to continue affecting sales and household consumption [4] - Policy Expectations: Anticipated policy measures include further mortgage rate cuts (10-20 basis points) and potential fiscal subsidies to stimulate the market [4] Market Valuation - Valuation Metrics: MSCI China Real Estate is trading at 11.4x and 0.60x 12-month-forward PE and P/BV, indicating a mixed valuation compared to historical averages [6] Additional Observations - Divergence Among City Tiers: There is a notable divergence in sentiment, with tier 1 cities experiencing significant deterioration while tier 3 cities show fragile improvement [4] - Government Role: The government is expected to prioritize the completion of unfinished projects to restore confidence in the housing market [3][71] Conclusion - The China property market is facing significant challenges, particularly in tier 1 and 2 cities, with declining purchase intentions and increased selling pressure. The outlook suggests continued price declines and a need for policy interventions to stabilize the market.