CITIC Securities: Some positive signals have emerged in the current real estate market.

On January 31, CITIC Securities issued a performance forecast analysis report for the real estate industry in 2025, pointing out that the real estate market will have the foundation for stabilizing in 2026, and the stabilization of house prices is also the key to repairing the balance sheets of real estate enterprises. The report stated that the recovery of operating assets is most prominent at present, and development enterprises with core resources and operational capabilities have a significant advantage. The decline in performance is the objective result of market adjustments in recent years, but the current real estate market also shows some positive signals. Data from the National Bureau of Statistics shows that as of December 2025, the price index for new and second-hand homes in 70 large and medium-sized cities has dropped by 12.6% and 21.3% respectively. The decrease in gross profit margin from carried-over projects and the provision of price decline reserves for inventory are the main reasons for the decline in the performance of real estate enterprises. However, the profit and loss statement reflects the historical situation of the enterprise, and some positive signals are also emerging in the current market. The magazine "Seek Truth" published an article emphasizing that real estate policies should provide sufficient support at once, shorten the market adjustment time as much as possible, and effectively boost the confidence of home buyers. The report believes that after the storm comes the rainbow, looking forward to the benign resonance of residents and corporate balance sheets. The cash flow statement of the household sector in China remains healthy, and the overall macroeconomy is on an upward trend, which is also the confidence for the potential continuous recovery of operating cash flow for enterprises in the future. Pushing residential prices to stabilize through policies, combined with the appreciation of commercial real estate assets, it is believed that the credit risks of the real estate sector have begun to recede. When the main financing cash flow of the industry shifts from mainly credit bonds to project financing, the contradiction between enterprise assets and liabilities mismatch is being resolved.