Core view
New houses: the market decline remains the same; New house sales in low-energy cities are significantly under pressure. The transaction area of new houses in 46 cities was 13.092 million square meters, down 29.7% month on month and 30.9% year-on-year. 1、 The month on month growth rates of the second and third tier cities were – 34.1%, – 41.4% and – 40.8% respectively, and the year-on-year growth rates were – 6.5%, – 20.0% and – 58.9% respectively. The first tier cities decreased month on month, with a year-on-year decrease of 23.8pct; The degree of second-line callback has expanded. Most cities have shown the same decline as the ring, and all localities have successively issued “supporting the city” policies, and the effect has not yet appeared at the market level. It is predicted that next month, we believe that we are about to enter the traditional spring of “gold, silver and four”. Combined with the impact of the low base of this month, the overall transaction expectation has rebounded month on month, but the overall transaction expectation is difficult to return to the level of the same period last year.
Second hand housing: the transaction scale decreased month on month and expanded year-on-year, mainly due to the inactive transaction during the Spring Festival, resulting in the decline of transactions throughout the month. The transaction area of second-hand houses in 16 cities was 2.874 million square meters, down 40.1% month on month and 40.6% year-on-year. 1、 The month on month growth rates of the second and third tier cities were – 32.7%, – 40.6% and – 43.8% respectively, and the year-on-year growth rates were – 43.4%, – 28.5% and – 67.2% respectively. All cities in the 12 cities showed a month on month decline in varying degrees, with more than 80% of cities falling by more than 30% month on month; On a year-on-year basis, only Chengdu rebounded year-on-year. Inventory and decontamination: the overall inventory decreased month on month, increased year on year, and the decontamination cycle increased month on month; The de urbanization cycle in Shanghai is still less than 6 months. As of February 28, the inventory area of new houses in 14 cities was 102271 million square meters, with a month on month ratio of – 1.2% and a year-on-year increase of + 0.7%; The decontamination cycle was 12.1 months, with a month on month increase of + 5.7% and a year-on-year increase of + 28.3%. 1、 The month on month growth rates of inventory area in the second and third tier cities were – 1.2%, – 0.7% and 0.0% respectively, and the year-on-year growth rates were + 2.4%, – 6.2% and + 15.1% respectively; The decontamination cycle is 9.1, 10.6 and 15.5 months respectively, with a month on month growth rate of + 7.3%, + 3.2% and + 13.1% respectively, and a year-on-year growth rate of + 30.9%, – 8.2% and + 65.2% respectively. In February and late Spring Festival, affected by the current sluggish sales, the bearish outlook of most real estate enterprises and the reduction of the scale of home ownership, there was less new supply in most cities, so the inventory area decreased slightly month on month. However, due to the sluggish transaction on schedule, the inventory removal cycle in most cities has been lengthened again month on month.
Sales of real estate enterprises: in February, the real estate market continued the downward adjustment trend. Affected by the epidemic and lack of industry confidence during the Spring Festival, the overall transaction of the market showed no obvious signs of warming. The year-on-year decline of sales of top 100 real estate enterprises was further expanded compared with that in January. In February, the top 100 real estate enterprises only realized a sales amount of 308.4 billion yuan based on equity, a year-on-year decrease of 48.4% (previous value – 42.3%). The new real estate enterprises on the top 20 list this month are: CCF international and Rongxin China. The monthly sales of all top 20 real estate enterprises fell by different ranges year-on-year. Although the current favorable policies continue, there is still great downward pressure on the market in the short term. It remains to be seen whether the market can recover in March and April.
Land market: 1) the volume of transactions decreased significantly, and the construction area of land transactions in Baicheng was – 62.1% year-on-year, due to the cold land market and the lack of centralized land auction (except for the completion of the first batch of centralized land auction in Beijing); 2) The overall average floor price of land transactions in Baicheng was – 23.7% year-on-year. Affected by the first round of centralized land auction in Beijing, the average floor price of first tier cities increased month on month. 2) the heat of the land market is still low, and the heat of first tier cities has warmed up. This month, the land premium rate of 100 cities is only 3.6%. The rise in the popularity of land auction in first tier cities is almost entirely due to Beijing. In 2022, the average premium rate of the first round of centralized land auction reached 4.5%, an increase of 3 percentage points compared with the third round of last year. At the same time, the flow auction rate also fell from 17% to 6%, and the land market has warmed up.
Investment advice
Recently, there are many favorable policies for real estate, but from the perspective of effect, the boosting effect on the market is limited. We believe that we still need to wait for the follow-up of higher-level cities to have real signal significance; At the same time, according to the requirements of economic objectives, the pressure of overall stable growth this year is still large, and real estate still needs to play a supporting role. Therefore, we believe that the pace of policy adjustment at both ends of supply and demand may be further accelerated after the two sessions, and there will be a clearer policy direction after the data of the Bureau of statistics from January to February are released in mid March. From the perspective of sector investment, the expectation of policy improvement is still strengthening. It is strongly recommended to continue to pay attention to the opportunities of the real estate sector in March and April. We suggest paying attention to three main lines: 1) leading real estate enterprises with low credit risk, smooth financing channels and high security: Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Vanke A, Longhu group and China Resources Land. 2) Under the influence of macro and industrial policies such as interest rate reduction, elastic real estate enterprises with large marginal income: Xuhui holding group, Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) . 3) At present, the real estate post cycle property sector with strong income determination, accelerated concentration, recent credit risk mitigation of related real estate enterprises and elastic reversal: Country Garden service, Xuhui Yongsheng life and xinchengyue service.
Risk tips
Real estate regulation continues to upgrade; Sales fell more than expected; Financing continued to tighten.
