In 2021, the sales performance showed the trend of "high first and then low": the cumulative sales scale of commercial housing in China increased by about 4.8% year-on-year in 2021, breaking through 18 trillion yuan and reaching a record high. However, the sales performance basically showed the trend of "high first and then low" in the year, and the monthly sales in the second half of the year recorded a negative growth year-on-year. As the pent up housing demand of residents was released after the epidemic was controlled in 2020, the monthly growth rate of commercial housing sales in the second half of 2020 was significantly higher than that in the same period in 2019, so a high base was formed. Superimposed on the upgrading of real estate regulation in the third quarter of 2021, especially the tightening of personal mortgage loans and other measures, the demand for house purchase shrank sharply, resulting in the rapid decline of the real estate market. In addition, affected by the significant decline in sales of China Evergrande due to risk events, the overall equity sales performance of head real estate enterprises in 2021 was significantly lower than that of scale and waist real estate enterprises.
Development investment and new construction decreased significantly in the second half of 2021: the year-on-year performance of national real estate development investment showed a downward trend since March 2021, and a negative growth was recorded from September to December. As banks tightened the credit of real estate enterprises in the third quarter and all localities also strengthened the supervision of pre-sale funds of real estate enterprises, real estate enterprises significantly reduced their investment to cope with the tight liquidity of funds. As a result, the completed investment in real estate development began to record a negative year-on-year growth in September, and the decline further expanded to about 13.9% in December. In addition, the newly started housing area in China has recorded negative growth year-on-year since April 2021, and recorded negative growth of about 33.1% and 31.1% year-on-year in October and December respectively, which is the most obvious decline since the cliff regression (about - 44.9%) affected by the epidemic in February 2020.
The enthusiasm of real estate enterprises to acquire land decreased in the second half of the year: affected by the new land supply policy of "two centralizations", the land auction cycle of the land market in 2021 has changed. Compared with the first round of centralized land supply, the second and third rounds of centralized land supply are characterized by the decline of premium rate and the rise of flow auction rate, which indicates that real estate enterprises have reduced their enthusiasm to acquire land under the background of regulation and upgrading, and the land purchase area of the national real estate industry recorded a negative growth from August to December. The total amount of land acquired by the top 100 real estate enterprises in 2021 also fell by 21.5% year-on-year to about 2.5 trillion yuan. In addition, some central enterprises and state-owned enterprises such as China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) bucked the trend and significantly increased their investment, and their land acquisition amount increased by about 241.7% and 156.4% year-on-year respectively.
Under the loose margin of credit policy, the survival of the fittest in the industry will intensify in 2022: looking forward to 2022, the central government will continue to adhere to the positioning of "housing without speculation", improve the housing market and security system, support the commercial housing market to better meet the reasonable housing needs of buyers, and take urban measures to promote the virtuous circle and healthy development of the real estate industry. Since September 2021, the central government has corrected the excessively tight credit policy, including encouraging banks to carry out M & a loan business of real estate projects in a stable and orderly manner, supporting high-quality real estate enterprises to acquire and get out of danger and high-quality projects of real estate enterprises with difficulties. In addition, the central bank has also recently lowered the LPR interest rate of more than 5 years linked to the interest rate of individual housing loans. It is expected that in 2022, the credit policy tends to be marginal loose, and the overall financing environment of real estate enterprises will be improved, but the financing of real estate enterprises with tight liquidity will be improved to a lesser extent. The deregulation of credit policy will be more conducive to the adverse expansion of central enterprises, state-owned enterprises and high-quality private real estate enterprises, and appropriately increase leverage to acquire high-quality projects of real estate enterprises in danger and difficulties. Therefore, the pattern of survival of the fittest in the industry will be further exacerbated. In terms of sales, the overall sales scale of real estate enterprises in 2022 may fall slightly under the background of the contraction of industry investment; The sales performance among cities will continue to differentiate, and the sales performance of the first tier cities with long-term economic development support and the core cities of the second and third tier metropolitan areas will maintain strong resilience driven by factors such as net population inflow.
Investment suggestion: in the medium and long term, the interior real estate enterprises with scale, brand advantages and relatively high financial safety margin will benefit from further improvement of industry concentration. It is suggested to pay attention to China Overseas (688. HK), China Resources Land (1109. HK) and Longhu (960. HK)
