Periodic/Sector reports
China Property: Oct 26: Supply Keeps Contracting While Sales Diverge, With Tier 1 And Second-hand Homes Ahead
UNDERWEIGHT (Maintained)
Analyst
Analyst
Highlights
- Supply continued to contract. MOF data showed land sales revenue fell 27.9% yoy in 9M26, with the decline gradually narrowing. Tier 1 inventory months decreased further in Oct 26, led by Beijing, where they dropped by 1.0 month and saleable GFA dropped 3.4% mtd.
- On the demand side, sales diverged among cities and markets. High frequency data for 1-25 Oct 26 showed Tier 1 still leading, though new-home growth slowed: new-home sales rose 2% yoy in four Tier 1 cities and fell 23% in nine Tier 2 cities, while second-hand sales grew 22% yoy in three Tier 1 cities and declined 1% in eight Tier 2 cities. ICE listing prices edged down 0.6% mom.
- Maintain UNDERWEIGHT. Our top picks are COLI and CR Mixc.
Analysis
- Supply continued to contract, with land sales revenue falling 27.9% yoy in 9M26... According to the MOF, land sales revenue was Rmb1,608.7b in 9M26, and the cumulative decline narrowed from 30.8% in 7M26 and 28.6% in 8M26. Derived from the cumulative figures, Sep 26 land sales revenue was about Rmb233.4b, down 23.2% yoy, a smaller drop than the 9M26 average.
- …while saleable GFA in Tier 1 inventory months declined further in Oct 26, led by Beijing. As of 25 Oct 26, saleable GFA in Beijing/Shanghai/ Guangzhou/Shenzhen changed by -20.0%/-5.5%/-11.3%/-37.4% yoy respectively, and inventory months dropped 3.2/1.2/1.7/7.7 months ytd to 17.1/7.7/16.1/15.9 months. Since end-Sep 26, Beijing’s saleable GFA has decreased 3.4% and its inventory months have gone down by 1.0 month, while the other three cities have each seen declines of less than 0.2 months.
- On the demand side, sales diverged among cities and markets. Property sales continued to show the following trends in October: a) Tier 1 cities outperformed Tier 2 cities, and b) the secondary market outperformed the new-home market. In our view, this reflects continued divergence across market segments amid relatively weak overall demand. a) During 1-25 Oct 26, new-home sales rose 2% yoy in four Tier 1 cities and declined 23% yoy in nine Tier 2 cities. Among Tier 1 cities, Beijing/Shanghai/Guangzhou/Shenzhen changed by +40%/-7%/-4%/-18% yoy, with Shanghai turning negative from +3% in 1-18 Oct 26. On a ytd basis (as of 25 Oct 26), 19 major cities fell 5% yoy, with Tier 1/2 cities at +4%/-9% yoy.
Highlights
- Supply continued to contract. MOF data showed land sales revenue fell 27.9% yoy in 9M26, with the decline gradually narrowing. Tier 1 inventory months decreased further in Oct 26, led by Beijing, where they dropped by 1.0 month and saleable GFA dropped 3.4% mtd.
- On the demand side, sales diverged among cities and markets. High frequency data for 1-25 Oct 26 showed Tier 1 still leading, though new-home growth slowed: new-home sales rose 2% yoy in four Tier 1 cities and fell 23% in nine Tier 2 cities, while second-hand sales grew 22% yoy in three Tier 1 cities and declined 1% in eight Tier 2 cities. ICE listing prices edged down 0.6% mom.
- Maintain UNDERWEIGHT. Our top picks are COLI and CR Mixc.
Analysis
- Supply continued to contract, with land sales revenue falling 27.9% yoy in 9M26... According to the MOF, land sales revenue was Rmb1,608.7b in 9M26, and the cumulative decline narrowed from 30.8% in 7M26 and 28.6% in 8M26. Derived from the cumulative figures, Sep 26 land sales revenue was about Rmb233.4b, down 23.2% yoy, a smaller drop than the 9M26 average.
- …while saleable GFA in Tier 1 inventory months declined further in Oct 26, led by Beijing. As of 25 Oct 26, saleable GFA in Beijing/Shanghai/ Guangzhou/Shenzhen changed by -20.0%/-5.5%/-11.3%/-37.4% yoy respectively, and inventory months dropped 3.2/1.2/1.7/7.7 months ytd to 17.1/7.7/16.1/15.9 months. Since end-Sep 26, Beijing’s saleable GFA has decreased 3.4% and its inventory months have gone down by 1.0 month, while the other three cities have each seen declines of less than 0.2 months.
- On the demand side, sales diverged among cities and markets. Property sales continued to show the following trends in October: a) Tier 1 cities outperformed Tier 2 cities, and b) the secondary market outperformed the new-home market. In our view, this reflects continued divergence across market segments amid relatively weak overall demand. a) During 1-25 Oct 26, new-home sales rose 2% yoy in four Tier 1 cities and declined 23% yoy in nine Tier 2 cities. Among Tier 1 cities, Beijing/Shanghai/Guangzhou/Shenzhen changed by +40%/-7%/-4%/-18% yoy, with Shanghai turning negative from +3% in 1-18 Oct 26. On a ytd basis (as of 25 Oct 26), 19 major cities fell 5% yoy, with Tier 1/2 cities at +4%/-9% yoy.
UNDERWEIGHT (Maintained)
Analyst
Analyst
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