For stock investors, the Golden Qilin analyst research reports offer authoritative, professional, timely and comprehensive insights to help uncover potential thematic opportunities. CITIC Securities Research by Chen Cong, Zhang Quanguo, Chen Zhaoru and Liu Donghang.
In recent months, rents in first-tier cities have risen on a month-on-month basis, and thanks to policy measures, a growing number of second-hand projects have achieved the situation where monthly mortgage payments are equal to or lower than rents. This situation in first-tier cities is very similar to the situation in Hong Kong at the end of 2024 and is a strong signal that housing prices have bottomed out. Policy is committed to reducing residents' home-buying burden, and relative to renting, buying a home is becoming increasingly cost-effective.
Mortgage payments equal to or lower than rents is an important indicator for gauging whether housing prices have bottomed out. This phenomenon refers to the situation where the monthly mortgage payment is lower than the rent, and it serves as important support at the bottom of housing prices. According to the seventh national census data, in 2020, renting households accounted for 21.1% of urban households nationwide, and 25.6% in cities, and renting households are potential homebuyers. Once rent exceeds the monthly mortgage payment in rental consumption, tenants will be pushed into the home-buying market, which in turn will drive housing prices to stabilize and recover. Hong Kong achieved a localized situation of mortgage payments equal to or lower than rents at the end of 2024, and after March 2025, housing prices entered a channel of halting declines and rebounding.
The extension of mortgage terms on August 28 and the fiscal interest subsidy on September 29 further pushed the entire market toward mortgage payments equal to or lower than rents. On August 28, mortgage terms were extended from 30 years to 40 years; on September 29, with central government finances playing the main role, a one-percentage-point interest subsidy was provided to first-time homebuyers purchasing small and medium-sized, low-total-price homes. According to statistics from the Iceberg Index, based on a home with a total price of 1.5 million yuan and a commercial loan amount of 1 million yuan, during the subsidy period, the ratio of monthly mortgage payment to rent gradually declined from 125% to 106% before the new policy in September, and further fell to 90% after September. Of course, this is a relatively ideal scenario. With a lower down payment ratio, or after the subsidy is phased out, it may still be impossible to achieve mortgage payments equal to or lower than rents. Some large cities with relatively low rental yields have not yet fully achieved this situation.
In first-tier cities where rents are trending upward on a month-on-month basis, this situation has been achieved in certain areas and is very close to being achieved across the board. The premise that mortgage payments equal to or lower than rents signals a bottom in housing prices is that rents are trending upward on a month-on-month basis. According to data from the Beike Research Institute cited by Securities Daily, in July the month-on-month increase in residential rents across 50 cities widened, with average rents in Beijing, Shanghai and Shenzhen having risen for five consecutive months on a month-on-month basis. Currently, rental yields in Beijing, Shanghai, Guangzhou and Shenzhen have reached 2.15%, 2.11%, 2.21% and 1.97% respectively, while the rental yield across the 50 cities has reached 2.8%. Based on this rental yield calculation, for subsidized commercial loans (based on a total home price of 1.5 million yuan and a loan of 1 million yuan), the monthly mortgage payment-to-rent ratios are 114%, 116%, 111% and 124% respectively. Overall, taking subsidies into account, Beijing, Shanghai, Guangzhou and Shenzhen are already close to achieving this situation across the board, with some individual projects having achieved it, approaching the situation that appeared in Hong Kong at the end of 2024.
The supply-side contraction in August has begun to show results, and demand-side policies in September are expected to further boost the market. According to our tracking, in September 2026, second-hand home transactions by typical intermediaries in 72 sample cities increased by 18.9% year on year, higher than the year-on-year growth of 11.7%, 10.6% and 14.1% in June, July and August. Since September 29, data from the same sample we track show that single-day transaction volumes on September 30 and October 1 increased by 31.7% and 37.4% year on year respectively, indicating a trend toward further market activity.
Risk factors: Although many small and medium-sized cities have already achieved mortgage payments equal to or lower than rents, rents are still on a downward trend, so this may not be a signal that housing prices have bottomed out; after all, interest subsidies have scope limitations, and homes outside the subsidy scope are still some distance from achieving mortgage payments equal to or lower than rents; and there is the risk of short-term performance declines for developers.
Investment strategy: On the premise that rents in some cities are rising on a month-on-month basis, mortgage payments equal to or lower than rents is an important signal that housing prices have bottomed out. Policy is committed to reducing residents' home-buying burden, and relative to renting, buying a home is becoming increasingly cost-effective. We recommend that investors actively embrace the new real estate cycle, and we are bullish on development companies and leading brokerage firms.