Zhongjin: The transaction side of the existing housing market in March is stable, focusing on investment opportunities in the real estate and property management sectors.

CICC released a research report stating that in March, the transaction volume and prices of second-hand houses remained relatively stable, but the listing volume and price trend were weak. The demand volume is a key variable determining the speed at which the latter is transmitted to the former. External disturbances in the near future may exert some pressure on this, but the accelerated progress on the policy side may have a certain offsetting effect in the short term, and may bring about some market speculation. Focus on investment opportunities in the real estate and property management sectors. Key points from CICC: In March, the transaction volume of second-hand houses continued to show resilience, and transaction prices continued to decline slowly. The timely response of real estate policies under external disturbances may be a key factor affecting future trends. In terms of transaction volume, the index of second-hand residential transaction volume in 80 cities measured by agencies doubled month-on-month on a low base formed during the Spring Festival, maintaining a level that is basically flat with November 2024, with a high year-on-year growth rate of +38% (compared to +35% in January-February); similarly, the transaction area of second-hand houses in 15 cities calculated by filings increased by 30% year-on-year (compared to +24% in January-February), showing continued resilience in second-hand housing transactions. Despite the pressure on the listing volume and price, the transaction prices continued to decline slowly in March, supported by demand volume. The homogenous transaction price index of second-hand residential properties by CICC dropped by 0.3% month-on-month (compared to -0.3% in February), and the negotiation space for transactions also remained essentially the same or slightly lower by 2 basis points (compared to -3 basis points in February) to 7.59%. CICC believes that demand volume may be the core factor determining the speed at which the expected listing price is transmitted to the transaction price side, and external disturbances in the near future may have some impact on demand volume through income expectations, affecting the timely response of real estate policies on demand volume and transaction prices. In March, the listing volume of second-hand houses accelerated, and the overall decline in listing prices widened, indicating relatively weak seller expectations. In March, the overall listing volume showed an accelerating trend, with the number of second-hand residential listings in 130 cities monitored by an increase of 2.9% month-on-month (compared to +2.1% in February). Due to the intensified competition among sellers, the index showing the average listing price of homogenous properties in key cities in March widened to -1.1% month-on-month (compared to -0.9% in February and flat in January), with Beijing, Shanghai, Shenzhen, and Chengdu experiencing declines ranging from 0.5% to 1.3% in listing prices; the average adjustment amplitude of existing price-adjusted properties also marginally widened by 17 basis points to -4.78%, slightly higher than the low point in September 2024 by 9 basis points, indicating that seller expectations adjust quickly in the context of rapid supply increase, which has a certain forward-looking effect on transaction price trends, but as mentioned earlier, the actual rate of transmission from listing price to transaction price still largely depends on transaction volume. In March, rental prices showed a slight decline month-on-month, with an extended vacancy period, indicating possible pressure on rental demand. March is usually the peak season for leasing after Chinese New Year, but the homogenous listing rental index by CICC remained stable with a slight decline of 0.1% on a month-on-month basis, and the vacancy period further increased to a historical high of 4.40 months, reflecting some pressure on rental market demand; meanwhile, as listing prices decline faster than rental prices, the rent-to-sell ratio in March rose by 1 basis point to 2.21%. Investment themes can be grasped based on funding styles: 1) Benefiting targets from local fundamental improvements driven by policy adjustments in top-tier cities, such as Ke Holdings (02423), Beijing Urban Construction Investment & Development (600266.SH), Hangzhou Binjiang Real Estate Group (002244.SZ). 2) Opportunities for resilient performance targets in good management and credit improvement expectations under real estate policy, such as Powerlong Real Estate Development (01908), Gemdale Corporation (600383.SH), and similar targets include Seazen Holdings (601155.SH). 3) Investments opportunities in blue-chip companies brought about by increased risk appetite related to domestic demand stimulation, such as China Resources Land (01109), China Resources Mixc (01209), China Overseas (00688), China Merchants Shekou Industrial Zone Holdings (001979.SZ). Risk Factors: External disturbances exceed expectations; domestic demand stimulus policy pace and intensity weaker than expected.