UBS: Tier-1 Existing Home Recovery May Be Short-Lived as Rents Continue to Fall
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UBS cautions that the recent rebound in tier-1 city existing home transactions may be a false dawn rather than a sustainable recovery, as underlying rents continue to decline. Through April 19, 2026, weekly existing home sales across six major cities rose 17% year-on-year, and listing inventory declined. However, UBS argues this improvement is primarily driven by municipal increases in Housing Provident Fund (HPF) loan caps and Shanghai's easing of purchase restrictions, rather than genuine demand recovery. The rebound is concentrated in older, smaller units priced below 2 million yuan, where gross rental yields of roughly 2.5% align with the HPF loan rate of 2.6%. Meanwhile, rents in tier-1 cities fell 2.6% year-on-year in March, indicating that fundamental supply-demand dynamics remain weak. This stands in stark contrast to Hong Kong's property recovery, where prices rebounded 14% from June 2025 troughs supported by a 21% surge in rents driven by talent inflows and rate cuts. UBS maintains Buy ratings on CR Land (1109.HK, target HK$36.00), Seazen (1030.HK, target HK$3.30), and CR Mixc (1209.HK), while retaining Sell ratings on Vanke H and A shares.
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