On September 21, the A-share real estate sector finally saw a long-awaited collective rally. By the close of trading, the Shenwan Real Estate Index (801180.SI) stood at 1971.06 points, up 3.95%, leading all major industry sectors and significantly outperforming the Shanghai Composite Index and the Shenzhen Component Index. The sector's total turnover reached 26.852 billion yuan that day, with 88 constituent stocks advancing and only 5 declining. Among the gainers hitting the daily limit were Greenland Holdings, Huafa Industrial, WorldUnion, 5i5j, Huali Family, Financial Street, and Huayuan Holdings.

Policy catalysts drive the rally

The direct trigger for the real estate stocks' strength came from the regulators' latest positioning on the industry and the rapid rollout of supporting policies. On September 18, the Ministry of Housing and Urban-Rural Development stated at a State Council Information Office press conference that the property market is now experiencing "two transformations": first, a major shift in supply-demand dynamics; second, the industry's entry into a "stock market era." According to ministry data, second-hand home transactions have risen from 27% of total sales in 2020 to 46% in 2025, and further to 52% in the first eight months of 2026, crossing the 50% threshold for the first time and marking the official arrival of the stock market era.

In addition, the newly revised Regulations on the Management of Housing Provident Funds officially took effect on September 20. This marks the third revision since the regulations were first promulgated in 1999. Under State Council Order No. 844, the core change expands the circumstances for withdrawing housing provident fund balances from the original six categories to nine. Article 24 of the new regulations stipulates that workers may withdraw their housing provident fund balances under any of the following conditions: (1) paying rent; (2) purchasing, constructing, renovating, or overhauling a self-occupied home; (3) repaying principal and interest on a housing loan; (4) decorating a self-occupied home; (5) paying property management fees for a self-occupied home; (6) retiring; (7) completely losing the ability to work and terminating the labor relationship with one's employer; (8) settling abroad; and (9) other housing consumption circumstances approved by the State Council. Notably, items (4) "decorating a self-occupied home" and (5) "paying property management fees" are newly added. Meanwhile, the original item regarding rent exceeding a prescribed proportion of household wage income has been revised to simply "paying rent," removing the proportional cap entirely. Looking at the withdrawal scenarios, the provident fund system now covers all major housing consumption stages, including renting, purchasing, decorating, and property fees.

Earlier, on August 28, the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, and the National Financial Regulatory Administration jointly issued the Notice on Improving the Commercial Housing Sales System (Document No. 2026-3), while the People's Bank of China and the National Financial Regulatory Administration jointly released the Opinions on Reforming and Improving Real Estate Credit Management to Accelerate the Construction of a New Real Estate Development Model (Document No. 2026-171). The China Securities Regulatory Commission also published its Opinions on Capital Market Support for Building the New Real Estate Development Model. The notice clearly states that, effective from its implementation date, commercial housing projects on newly transferred land and projects on already-transferred land that have not yet obtained construction project planning permits should prioritize presale-free (ready-house) sales, while projects that have already obtained planning permits are encouraged to adopt this model.

Fundamentals show marginal improvement

Behind the intensive policy rollout lies a gradual improvement in real estate fundamentals. According to the National Bureau of Statistics, in August 2026, new commercial housing prices in 70 major cities fell 0.2% month-on-month and 3.3% year-on-year, while second-hand home prices dropped 0.3% month-on-month and 5.1% year-on-year, with year-on-year declines continuing to narrow compared to July. The shift in transaction structure is equally noteworthy. Ministry of Housing and Urban-Rural Development data shows that second-hand home transaction area reached 549 million square meters in the January-August period, up 10.6% year-on-year and exceeding new home sales area for several consecutive months; during the same period, new commercial housing sales area declined 12.1% year-on-year.

Several institutions are taking a cautiously optimistic view of the sector's outlook, generally believing that the industry's recovery will remain primarily structural. Kaiyuan Securities maintains a "preferred" rating on the sector, arguing that following the August 28 package of new policies, the industry's foundational systems have undergone major reforms, pushing the market toward a more stable and solid direction. On the demand side, there remains considerable room for easing in core cities' restrictive policies, provident fund loans, and urban renewal initiatives; if policy intensity and pace are further strengthened, the process of stabilizing and reversing the property market decline could accelerate. Soochow Securities states that the market is still in a bottoming and adjustment phase, noting that cumulative year-on-year declines in sales value and housing prices are narrowing, personal mortgage loan declines are easing, first-tier city prices remain relatively stable, and quality projects in core cities still enjoy some market support, with recovery continuing to be structurally driven. Founder Securities points out that the residential development segment is under triple pressure from inventory impairment, capital chain constraints, and shrinking incremental space, leaving industry momentum still in a bottom-seeking range. It recommends focusing on two main investment tracks: "operational benchmarks plus transformation pioneers," with attention on high-dividend, low-volatility, counter-cyclical hold-type opportunities, as well as individual stocks with revaluation potential from transformation opportunities.