--- title: "Three Factors Leading the Real Estate Turning Point That the Market Has Overlooked" type: "News" locale: "en" url: "https://longbridge.com/en/news/283578824.md" description: "Caitong Securities points out three key factors: first, the provident fund interest rate is the true anchor for mortgage rates, with coverage ratios in major tier-1 and tier-2 cities generally exceeding 50%, bringing the comprehensive rate down to 2.83%; second, Shanghai's inventory has bottomed out, with listing volume dropping to 870,000 units and a sales cycle of just four months; third, RMB appreciation opens up room for rate cuts, with over one trillion dollars in funds awaiting settlement poised to enter as the currency strengthens. \"With real estate stock prices low, valuations low, and holdings low, a rally may be imminent.\"" datetime: "2026-04-22T01:21:23.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/283578824.md) - [en](https://longbridge.com/en/news/283578824.md) - [zh-HK](https://longbridge.com/zh-HK/news/283578824.md) --- # Three Factors Leading the Real Estate Turning Point That the Market Has Overlooked The market focuses on macro interest rates, policy stimulus, and Shanghai transaction volumes, yet may have missed three key variables quietly reshaping the direction of the real estate cycle. On April 21, Caitong Securities released an in-depth industry report titled "Series Study on Real Estate Turning Points I: Three Factors Leading the Current Real Estate Cycle Turning Point That the Market Has Overlooked," noting that while consensus on the current real estate sector remains unformed, three underestimated factors—**provident fund interest rates, Shanghai inventory bottoming out, and RMB appreciation**—are jointly driving market stabilization. ## Factor One: The Provident Fund Interest Rate Truly Determines Mortgage Costs The market habitually watches LPR and commercial loan rates, but Caitong Securities argues this perspective is outdated. By the end of 2025, the average interest rate for personal housing commercial loans stood at 3.06%, while the five-year-plus provident fund loan rate was only 2.60%. Crucially, **in major tier-1 and tier-2 cities, provident fund loan limits generally cover more than 50% of the required home purchase loan**. The report calculates that if provident funds cover 50% of the loan, the comprehensive mortgage rate drops to 2.83%; if they cover 100%, it falls to 2.60%. Taking specific cities as examples: Guangzhou's provident fund limit covers 111% of the required loan, Wuhan 195%, Chongqing 167%, Suzhou 106%, Zhengzhou 195%, and Wuxi 147%. Even Beijing, which has the lowest provident fund coverage among tier-1 cities, reaches 45%. The report states, "The provident fund interest rate determines current mortgage rates, not the macro rates that the market focuses on more." Regarding fund pools, by the end of 2024, **the national provident fund deposit balance reached 10.9 trillion yuan, up 8.6% year-on-year, setting a new record**. In 2024, total contributions amounted to 3.6 trillion yuan, but individual loan disbursements were only 1.3 trillion yuan, a year-on-year decline of 11.4%, meaning "**inflows into the pool continue to exceed outflows, leading to increasing capital accumulation**". On the policy front, the 2026 Government Work Report proposed "deepening reforms to the housing provident fund system," marking the first time since 2015 that this issue has been included in the Government Work Report after eleven years. Since 2026, local authorities have cumulatively issued approximately 160 real estate policies, including over 60 related to provident funds, making "optimization frequency the highest among all policy types." Regarding timing, provident fund loan rates were cut by 25 basis points in May of both 2024 and 2025. The report notes that "**subsequent attention should be paid to the potential provident fund rate cut in May of this year**". ## Factor Two: Shanghai Is Not Just About "Surge in Transaction Volume"—Inventory Is Naturally Bottoming Out The market has noticed the rebound in Shanghai's transaction volume, but Caitong Securities believes a more significant signal has been overlooked—**listing volumes are continuously declining**. In March 2026, Shanghai second-hand housing transactions reached 31,215 units, a 6.3% year-on-year increase, marking the highest level since March 2021, nearly five years high. More notably, "**without additional policy support**, second-hand housing transactions in Shanghai exceeded 22,000 units for three consecutive months from November 2025 to January 2026, firmly staying above the boom-bust line (20,000 units)." As of early April 2026, Shanghai's second-hand housing listing volume (based on Beike data) dropped to 870,000 units, a decrease of 330,000 units from the peak, representing a 28% decline, with the sales cycle shortening to four months. The report emphasizes that the decline in listings is not solely due to inventory absorption through transactions; "**a significant portion comes from sellers actively removing listings**." In recent years, the price floor has absorbed a considerable amount of bubbles, causing some properties to fall below sellers' psychological price thresholds. Consequently, sellers have shifted to holding these properties as rental assets. This stands in stark contrast to previous patterns following policy stimulus where "listing volumes continued to rise, selling more and more." **On the price front, stabilization is spreading from the bottom up.** According to the Iceberg Index, by the end of March 2026, the price change for low-price segments (500,000 to 5 million yuan) in Shanghai ranged from +0.1% to +1.2% over the past month and +0.6% to +2.7% over the past three months. Prices in the low-price segment turned from decline to growth starting mid-to-late January 2026. For medium-to-high price segments (5 million to 30 million yuan), the decline has narrowed continuously, entering a bottom oscillation state. Regarding the replacement chain, the report used the indicator "average price of lower-tier segment / average price of higher-tier segment" and found that since 2026, this ratio has bottomed out and begun to recover, indicating that the down payment pressure for "selling one and buying one" is decreasing, and the chain for upward replacement is restarting. Referencing overseas experience, after new home prices stabilized in Tokyo (Japan's capital region), Osaka (Kinki region) followed with a lag of nine months. For second-hand prices, the Kinki region lagged behind the capital region by 16 months. After the US financial crisis, core cities like Los Angeles and Dallas saw their price turning points appear earlier than the national average. Based on this, the report concludes that "**after core cities stabilize, broader stabilization may occur within the next 1-2 years**." **** ## Factor Three: RMB Appreciation Could Turn Trillions in Awaiting Settlement Funds into New Real Estate Momentum This is the factor with the lowest market attention among the three. The logic chain is as follows: **RMB appreciation → opens room for monetary easing → rate cut window arrives; simultaneously, RMB appreciation → increases corporate willingness to settle foreign exchange → M1 expansion → real estate cycle initiation**. **** Regarding exchange rates, the average USD/CNY rate rose to 6.9 in March 2026. On April 8, the onshore and offshore CNY exchange rates against the USD surged by over 300 basis points intraday, both reaching new highs since April 2023. In contrast, the interest rate spread between Chinese and US ten-year government bonds had long hovered between -2% and -3%, constraining domestic monetary policy space due to exchange rate pressures. Now that pressures have eased, the report believes "**a new round of rate cuts could potentially bring mortgage rates down to under 3%**." **** Regarding settlement funds, the report estimates that from 2022 to March 2026, the surplus in bank customer foreign exchange receipts and payments consistently exceeded the surplus in foreign exchange settlements and sales, with trade enterprises holding approximately **$1.0431 trillion** in funds awaiting settlement. As the RMB continues to appreciate, the willingness to settle will rise. The report further calculates: if 10%, 30%, or 50% of the awaiting settlement funds are settled, based on an average USD/CNY rate of 6.9, this would create approximately 719.7 billion, 2.1592 trillion, and 3.5986 trillion yuan in M1 increments respectively. Against the March 2026 M1 total of 119.3 trillion yuan, this could drive M1 growth by 0.6%, 1.8%, and 3.0%. Historical experience shows that "monetary cycles typically lead real estate cycles by 1-2 quarters." The report points out, "When M1 growth turns consistently positive and the scissors difference between M1 and M2 narrows continuously, it usually signifies enhanced real entity investment and turnover, money becoming more demand-deposit oriented, and debt leverage expanding," thereby driving asset price increases. ## The Bottom for Real Estate Stock Prices May Have Already Appeared Drawing from US and Japanese experiences, the sequence for real estate stock price bottoms is typically: **stock price bottom → core city housing price bottom → overall housing price bottom**. In the Japanese case, stock prices of real estate leaders such as Mitsui, Sumitomo, and Mitsubishi hit bottom in December 1999, February 2000, and January 2002 respectively, leading the core city (capital region) housing price bottom by 0-2 years and the overall housing price bottom by 1-3 years. In the US case, stock prices of real estate leaders like NVR, Horton, Pulte, and Lennar all bottomed out in the first half of 2009, leading core city housing prices by 0-2 years and the national housing price by about 3 years. The report concludes that "the current real estate sector trend is still in the valuation repair stage where consensus has not yet formed," and the three overlooked factors "have the potential to gradually form consensus in the future." The report states, "**With real estate stock prices low, valuations low, and holdings low, a rally may be imminent.**" ### Related Stocks - [159768.CN](https://longbridge.com/en/quote/159768.CN.md) - [512200.CN](https://longbridge.com/en/quote/512200.CN.md) - [515060.CN](https://longbridge.com/en/quote/515060.CN.md) - [159707.CN](https://longbridge.com/en/quote/159707.CN.md) - [601108.CN](https://longbridge.com/en/quote/601108.CN.md) - [8801.JP](https://longbridge.com/en/quote/8801.JP.md) - [8830.JP](https://longbridge.com/en/quote/8830.JP.md) - [8802.JP](https://longbridge.com/en/quote/8802.JP.md) - [NVR.US](https://longbridge.com/en/quote/NVR.US.md) - [DHI.US](https://longbridge.com/en/quote/DHI.US.md) - [PHM.US](https://longbridge.com/en/quote/PHM.US.md) - [LEN.US](https://longbridge.com/en/quote/LEN.US.md) - [LEN.B.US](https://longbridge.com/en/quote/LEN.B.US.md) ## Related News & Research - [Kinetic Development Calls EGM to Approve Series of Real Estate and Settlement Agreements](https://longbridge.com/en/news/283413912.md) - [Kinetic Development Details Final RMB97.1 Million Payment in Seedland Property Deal](https://longbridge.com/en/news/283378107.md) - [E-Star Commercial publishes 2025 annual report](https://longbridge.com/en/news/283625469.md) - [ZAWYA: Golden Town injects EGP 8bln into New Administrative Capital projects, continuing its success journey](https://longbridge.com/en/news/282824369.md) - [China's new home prices extend decline despite improvement in major cities](https://longbridge.com/en/news/282924123.md)