Goldman Sachs: China Property at "Cycle Trough" - Historic Investment Opportunity?

Goldman Sachs Week 26 China Real Estate Report reveals unprecedented market inflection points with historic valuation lows and surprising sales rebounds.Historic Valuation Trough:Developer price-to-book ratios crash to just 0.5x, far below ALL historical bottom levels. Compared to 2008 (0.7x), 2011 (0.9x), and 2014 (0.9x) cycle lows, current valuations represent unprecedented compression. Offshore-listed developers trade at 38% discount to NAV, onshore developers at 24% discount. Goldman declares market at "downward cycle trough."Sales Data Explosive Rebound:Week 26 new home sales volume surges 59% week-over-week despite 17% year-over-year decline. Yangtze River Delta cities lead with spectacular 73% weekly increase and 3% positive annual growth. Tier-3 cities achieve only positive YoY growth at 9%, defying broader market weakness.Secondary Market Resilience:First-half secondary home sales volume jumps remarkable 18% year-over-year with total transaction volume up 19%, significantly outperforming primary market. Week 26 secondary transactions rise 3% weekly with only 3% annual decline, demonstrating superior market resilience.Tariff Policy Surprise Beneficiary:Goldman's tariff impact assessment reveals export-dependent cities experiencing 91% weekly new home sales surge versus 36% in other cities - commanding 56 percentage point advantage. Since reciprocal tariff announcement, export cities maintain 10% higher average weekly sales than Q1 2025, highlighting regional divergence.Policy Tailwinds Accelerating:Vice Premier He Lifeng emphasizes deep integration of urban renewal with trade-in policies, with RMB 138 billion quota remaining available. PBOC reiterates accelerated housing policy implementation and intensified efforts to revitalize existing housing stock. Policy signals increasingly supportive.Inventory Conditions Improving:Week 26 inventory months decline to 25.1 from May average of 26.2 months. Inventory balance drops 0.2% weekly and 3.7% since end-2024. June completion and new construction both expected to show single-digit declines, suggesting supply-demand rebalancing.Sector Spillover Effects:Home appliance sales likely achieve positive growth in June based on secondary housing trends. Beike expected to deliver 4% Q2 GTV growth with secondary transactions up 12% offsetting 16% new home decline.Investment Implications:Market exhibits triple bottom formation: policy bottom, valuation bottom, and sentiment bottom. Combined with supportive policy framework, current conditions provide compelling risk-adjusted entry point for contrarian investors. Regional differentiation accelerating with export cities gaining structural advantages.This comprehensive analysis documents potential major inflection point in China's property cycle, with historic valuations coinciding with improving fundamentals and policy support.