Events
In March 2022, loose policies on real estate regulation occurred frequently. Zhengzhou issued the notice on promoting the virtuous cycle and healthy development of the real estate industry, Nanchang issued the notice on optimizing the use policy of housing provident fund, and Suzhou issued the notice on several policies and measures to further help market players relieve difficulties and strive to stabilize economic growth, Provincial capital cities and other key cities have tried their best to rescue the market.
Commentary
Stimulating sales is the key to promoting the virtuous circle and healthy development of the real estate industry. ① The current sales situation is not optimistic. From January to February 2022, the full caliber sales amount of top 20 real estate enterprises decreased by 40% year-on-year, and the sales amount of all 20 real estate enterprises decreased by more than 20% year-on-year; The sales area of commercial housing in 30 large and medium-sized cities in China decreased by 29% year-on-year from January to February 2022, and the sales area of commercial housing decreased by 47% year-on-year from March 1 to 9 2022. ② The real estate industry is in a vicious circle of “sluggish sales – tight cash flow of real estate enterprises – large discounts / difficult delivery – lack of market confidence – downward sales – land acquisition / stagnation of new construction”, boosting market confidence Stimulating the release of demand is the key for the real estate industry to return to the virtuous cycle of “sales recovery – improvement of cash flow of real estate enterprises – reduction of discounts / delivery on schedule – restoration of market confidence – stable sales – land acquisition / resumption of new construction – normal push sales”. ③ The health of the industry needs the stability of enterprises, and the stability of enterprises needs the support of sales. In 201421, the proportion of sales collection funds in the funds in place of real estate development enterprises increased from 36% to 53%. The dependence of real estate enterprises on sales collection gradually increased. The optimization of pre-sale fund supervision helps to alleviate the short-term cash flow pressure of real estate enterprises, but it is not enough to maintain the sustainable and stable development of real estate enterprises, It is urgent to further relax the demand side and drive sales growth.
A nationwide demand side deregulation policy may be on the way. At present, the real estate regulation and control policies have been relaxed to a certain extent. On the credit side, Heze, Guangzhou, Nanning, Foshan, Chongqing and other cities have reduced the down payment ratio or reduced the housing loan interest rate. On the local regulation side, Suzhou, Jinan, Qingdao, Kunming, Jiaxing and other cities have successively introduced policies such as loose settlement, provident fund, house purchase subsidy, pre-sale supervision and so on, However, with the exception of Zhengzhou, there are few direct easing on the demand side of purchase, sale and price restrictions, which has delayed the effect of boosting sales in the real estate market, and the recent sales situation has not improved. Therefore, we expect that in the future, there will be a wide range of deregulation policies on the demand side, and the “policies for cities” will be used more flexibly. On the premise of relatively stable house prices, some high-energy cities may release restrictions on purchase, sale and price in stages.
It is expected that some high-quality cities will drive the stabilization and recovery of the national market. The relationship between supply and demand in the real estate market has been improved: ① affected by the contraction of land acquisition willingness of real estate enterprises, the construction area of homestead sold in 300 cities nationwide decreased by 24% year-on-year in 2021; ② The construction progress of real estate enterprises is slow. In 2021, the new construction area of commercial housing in China decreased by 11% year-on-year, and the China State Construction Engineering Corporation Limited(601668) new construction volume decreased by 40% year-on-year from January to February 2022. It is expected that the new construction situation of national real estate development enterprises is not optimistic; ③ Some first and second tier cities and cities in the Yangtze River Delta have good fundamentals. The inventory removal cycle of new houses on sale in Hangzhou, Shanghai, Hefei and other cities is less than 6 months. We judge that the supply of the real estate market will decline significantly in 2022, and the demand remains to be released. Once the demand side is favorable in some high-quality cities, the sales will increase rapidly. We expect that the sales of some first and second tier cities will gradually improve in March and April, and drive the market of fourth and fifth tier cities to bottom during this period.
Investment advice
We believe that a wide range of demand side easing policies will be gradually introduced, and the sales of some first and second tier cities will take the lead in improving, driving the fourth and fifth tier cities to build a bottom. We are optimistic about green city China, China Construction Development International and Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , which are mainly high-quality first and second tier cities. At the same time, with the improvement of overall sales, the valuation of private enterprises is expected to be repaired, and they are optimistic about Seazen Holdings Co.Ltd(601155) and rongchuang China.
Risk tips
The implementation effect of the existing real estate improvement policies is less than expected; Weak demand side easing policy
