Is dawn breaking? New signals are appearing in the real estate sector from an institutional perspective. As A-share listed real estate companies recently intensified their disclosures of 2025 performance forecasts, a comprehensive picture of the industry's operations over the past year is gradually coming into focus. According to the CITIC Securities research team, the decline in performance is an objective outcome of the real estate market's adjustment over the past few years. Research institutes from multiple brokerages believe that currently, positive signals that cannot be ignored are emerging in the market, including a decrease in the volume of second-hand home listings in major cities, continuous improvements in financing policies, and the ongoing progress of debt restructuring for property developers. Looking ahead to 2026, analysts state that the conditions for the real estate market to stop declining and stabilize are now in place, and policy measures are expected to resonate with fundamental improvements, driving sales in key cities towards a new equilibrium.

The performance of property developers remains under pressure. Recently, several real estate companies have disclosed their 2025 performance forecasts, reigniting market attention on the sector. Data shows that as of January 31st, 78 companies in the A-share real estate sector have issued performance forecasts or brief reports. According to statistics from the CITIC Securities Research Institute's Real Estate and Property Services team, among the companies that have disclosed forecasts, the majority are listed developers anticipating losses; a total of 58 companies fall into this category, with aggregate estimated net profit attributable to parent company shareholders ranging from a loss of 239.75 billion yuan to 206.04 billion yuan. Another 5 companies announced expected profit declines, with combined net profit attributable to parent company shareholders between 2.27 billion yuan and 2.54 billion yuan, representing a 75% to 78% decrease compared to the 10.32 billion yuan profit in 2024. Regarding positive performance forecasts, 6 companies have so far announced expected growth, with combined net profit attributable to parent company shareholders ranging from 1.76 billion yuan to 1.94 billion yuan. Furthermore, 18 companies have not yet released performance forecasts, meaning their full-year performance changes are estimated to be within a range of -50% to +50% year-on-year. The CITIC Securities research team estimates the combined 2025 performance for this group of companies to be between 6.79 billion yuan and 20.37 billion yuan.

Integrating all the disclosed and estimated data mentioned above, the CITIC Securities research team indicated that the A-share real estate sector's estimated net loss attributable to parent company shareholders for 2025 ranges from 198.42 billion yuan to 145.50 billion yuan. For comparison, the sector's net loss attributable to parent company shareholders in 2024 was 161.40 billion yuan. Discussing the reasons for the performance decline, the CITIC Securities research team views it as an objective reflection of the market adjustments over recent years. Data from the National Bureau of Statistics shows that as of December 2025, the new home and second-hand home price indices for 70 large and medium-sized cities have fallen by 12.6% and 22.3% respectively from their peaks. The main reasons for the developers' performance decline are the reduced gross profit margins of projects transferred for revenue recognition and provisions for inventory write-downs.

The market is currently showing positive signals. Despite performance data still being within an adjustment phase, analyses from multiple brokerage research institutes suggest that multiple positive signals are accumulating in the real estate market. "The profit statement reflects the company's historical situation, but some positive signals are also appearing in the current market. The volume of second-hand home listings in major cities has slightly decreased; an article published in the Qiushi magazine emphasized that real estate policies should be provided sufficiently at once to shorten the market adjustment period as much as possible, which has also effectively boosted homebuyers' confidence," stated the CITIC Securities research team. The Shenwan Hongyuan real estate team said, "The most difficult period for property developers may gradually be passing. This stems from, on one hand, our belief that the bottom of China's real estate fundamentals is gradually approaching. After more than four years of deep industry adjustment, China's new construction starts have fallen by 75% since the 2021 peak, significantly exceeding the 50%-70% declines seen in the US, Japan, and Germany. China's second-hand home prices have fallen by 40% since the 2021 peak, also significantly exceeding the average decline of 34% across 42 countries from 1970 to the present. On the other hand, we believe the pressure from inventory impairment for mainstream developers is gradually being released. From 2019 to the first half of 2025, the cumulative asset and credit impairment losses of mainstream developers averaged 8% of their inventory."

When analyzing the fundamentals in detail, the Huatai Securities research team stated that at the beginning of 2026, demand for second-hand homes in core cities showed marginal improvement, and supply pressure eased. On one hand, transaction volumes for second-hand homes continued to improve after New Year's Day, with week-on-week increases in transaction area of 29%, 5%, and 5% in the second, third, and fourth weeks respectively; the average weekly transaction volume over these three weeks increased by 9% compared to the December weekly average. On a cumulative year-on-year basis, from January 1st to 25th, the registered area for second-hand homes in 22 cities fell by 2% year-on-year, a significant narrowing from the 15% decline seen in the first half of the month. On the other hand, as of January 25, 2026, listing volumes in key 20 cities and first-tier cities continued to decline, both down 0.6% week-on-week compared to the previous week, and down 3.3% and 6.3% respectively from the end of October 2025 (the peak within 2025), indicating some alleviation of supply pressure. On the policy front, the Huatai research team believes that financing policies are improving, and expectations for demand-side policies are heating up. For example, on December 24, 2025, Beijing introduced a new round of real estate policies, optimizing purchase restrictions and provident fund regulations. Referencing Beijing's intensity, Shanghai has room to follow suit regarding the social security年限 requirements for non-locals buying property in core areas, and the market holds policy expectations for this. Regarding the credit aspect, the Huatai research team analysis indicated that credit pressure on leading developers is easing, and debt restructuring for other companies is progressing steadily. According to their statistics, 15 key developers cumulatively reduced debt by 324.6 billion yuan in 2025, with domestic and offshore debt reductions of 28.3 billion yuan and 296.3 billion yuan respectively.

Stabilization is anticipated in 2026. After undergoing a deep adjustment, where is the real estate industry headed? Multiple brokerage research institutes believe that as policy effects continue to manifest and market supply and demand move towards balance, the foundation for the industry to stop declining and stabilize is being solidified. The Guotai Haitong research team stated, "Since year-end 2025 sales did not achieve a tail-raising effect. We believe that the sales base will continue to shift downward in 2026, with some prior risks being released. Simultaneously, industry supply is contracting and improving in quality, with old and new dynamics forming a合力 to promote a recovery in funding. Based on the above judgments, we believe sales in key cities are expected to find an equilibrium point in 2026. The industry's supply-demand structure is gradually stabilizing." The aforementioned Shenwan Hongyuan real estate team anticipates that the profit recovery for high-quality developers is timely. "Considering that China's real estate industry fundamentals are gradually nearing a bottom, the recent policy tone has become more proactive, and the industry structure has significantly optimized following deep supply-side clearing, we expect that the operational performance, including sales and investment, of high-quality enterprises is likely to stabilize and recover first, driving a subsequent bottoming out and recovery in settlement-side performance. The profit recovery is timely." The aforementioned CITIC Securities research team stated that, overall, the real estate market possesses the foundation to stop declining and stabilize in 2026, and price stabilization is also key to the repair of developers' balance sheets. Their analysis notes that the cash flow statements of China's household sector remain healthy, and the macroeconomy is progressing positively, which also provides the confidence that future net operating cash inflows for enterprises may continue to recover. "Policies are strongly pushing for residential price stabilization, coupled with commercial real estate asset appreciation. We believe the main credit risks in the real estate sector have begun to recede. As the industry's primary financing cash inflows shift from being dominated by credit bonds to being dominated by project financing, the mismatch between corporate assets and liabilities is being resolved."