Open Source Securities: Shanghai new house prices continued to lead gains in August, while the year-on-year decline in second-hand house prices narrowed.

The report released by Open Source Securities stated that in August 2025, the month-on-month decline in the sales prices of new homes in 70 cities remained stable, with a smaller year-on-year decline. The price decline in new homes in first-tier cities also narrowed. As for second-hand homes, the month-on-month decline in sales prices expanded, while the year-on-year decline narrowed. Looking at the performance of key cities in the first and second tiers, in August, more cities saw a decrease in new home prices compared to an increase. Among first-tier cities, only Shanghai saw an increase in new home prices compared to the previous month. Since the beginning of this year, China's real estate market has been moving towards stabilizing after a downturn. During this stabilizing process, there may still be minor fluctuations in housing prices, but it is expected to further stabilize under the influence of policies. The main points of Open Source Securities are as follows: New homes in Shanghai continue to lead the market, while the year-on-year decline in second-hand home prices narrows. The National Bureau of Statistics released the changes in sales prices of commercial residential properties in 70 large and medium-sized cities in August 2025. Looking at the month-on-month changes in new commercial residential properties, first, second, and third-tier cities saw a decrease of -0.1%, -0.3%, and -0.4%, respectively (compared to -0.2%, -0.4%, and -0.3% in July). The overall decline in prices across 70 cities was -0.3%, staying the same as the previous month. In terms of year-on-year changes, the declines in first, second, and third-tier cities were -0.9%, -2.4%, and -3.7%, respectively (compared to -1.1%, -2.8%, and -4.2% in July), with the overall decline in new home prices across 70 cities narrowing by 0.4 percentage points to 3.0%. In August 2025, the number of cities where new home prices rose, remained the same, or fell month-on-month were 9, 4, and 57, respectively. The decline in second-hand home prices narrows year-on-year, while the month-on-month decline expands. In terms of the month-on-month changes in second-hand residential property prices, the prices in 70 cities decreased by -0.6% in August, with the decline expanding by 0.1 percentage points compared to the previous month. Among first, second, and third-tier cities, the month-on-month declines were -1.0%, -0.6%, and -0.5%, respectively (compared to -1.0%, -0.5%, and -0.5% in July). When looking at the year-on-year changes, the prices of second-hand homes in 70 cities were down by -5.5%, with a 0.4 percentage point reduction in the decline. In first, second, and third-tier cities, the year-on-year declines were -3.5%, -5.2%, and -6.0%, respectively (compared to -3.4%, -5.6%, and -6.4% in July), with the declines expanding by 0.1 percentage point, narrowing by 0.4 percentage points, and narrowing by 0.4 percentage points, respectively. In August 2025, the number of cities where second-hand home prices rose, remained the same, or fell month-on-month were 1, 0, and 69, respectively. Shanghai leads the way in new home prices on a month-on-month and year-on-year basis, while the prices of second-hand homes in 35 cities all declined year-on-year. Looking at the performance of key cities in the first and second tiers, in August 2025, more cities saw a decrease in new home prices compared to an increase. From the perspective of month-on-month changes, Shanghai, Hangzhou, and 7 other cities saw an increase, while from the year-on-year perspective, Shanghai, Hangzhou, and 5 other cities saw an increase. Among them, Shanghai led the way with a month-on-month increase of +0.4% and a year-on-year increase of +5.9%. Only Shanghai among first-tier cities achieved an increase in new home prices on a month-on-month basis. In terms of year-on-year changes in new home prices from January to August, Shanghai and Taiyuan led the way with increases of +5.8% and +1.1%, respectively, among the 35 cities. Investment recommendation In August 2025, the month-on-month decline in the sales prices of new homes in 70 cities remained stable, while the year-on-year decline narrowed, and the price decline in first-tier cities also narrowed. As for second-hand homes, the month-on-month decline in sales prices expanded, while the year-on-year decline narrowed. Since the beginning of this year, China's real estate market has been moving towards stabilizing after a downturn. During this stabilizing process, there may still be minor fluctuations in housing prices, but it is expected to further stabilize under the influence of policies. With a more proactive fiscal policy and moderately accommodative monetary policy, the work of stockpiling and transforming urban villages is expected to accelerate, improving the existing supply and demand relationship of housing and contributing to the process of stabilizing after a downturn. Recommended targets: 1. Strong credit-worthy property developers who are good at capturing the needs of improving customers in cities with good fundamentals: GREENTOWN CHINA (03900), China Merchants Shekou Industrial Zone Holdings (001979.SZ), CHINA OVERSEAS (00688), Xiamen C&D Inc. (600153.SH), Hangzhou Binjiang Real Estate Group (002244.SZ), C&D INTL GROUP (01908). 2. Dual-drive of residential and commercial real estate, benefiting from the recovery of the real estate market and consumption promotion policies: CHINA RES LAND (01109), Seazen Holdings (601155.SH), LONGFOR GROUP (00960). 3. High-quality property management targets that stand out in service quality under the policy of "good houses, good services": CHINA RES MIXC (01209), GREENTOWN SER (02869), POLY PPT SER (06049), China Merchants Property Operation & Service (001914.SZ), BINJIANG SER (03669), C&D PROPERTY (02156). Risk warning Sales recovery in the industry may be lower than expected, and policy relaxation may be lower than expected.