Accelerated supply squeeze yet to be priced in China

Supply squeeze accelerating: We believe China's housing supply squeeze is evolving into a structural theme that could become increasingly relevant from 2027 onwards, even as investors remain focused on policy developments in the near term. New-home supply across 80 key cities fell 17% y-o-y in 8M26, equivalent to just 12% of the 2019 full-year peak, while land acquisitions declined by a further 20% y-o-y, making a meaningful pipeline rebuild unlikely. The completed-home sales reform could tighten supply even further. We estimate developers' annual investment capacity may decline by c23% in the medium term unless they releverage or receive additional cashflow support. As a result, we expect the pace of broad inventory contraction to accelerate by 10-30% to a 11-13% CAGR decline over 2025-30e, vs a 10% decline over 2023-25. In our view, the supply squeeze is likely to intensify faster than currently reflected in market expectations, with tighter supply and improved confidence in project