Industry comments
This week, the performance of real estate and property sectors were relatively sluggish. This week, Shenwan A-share real estate sector rose or fell by – 5.5%, ranking 22nd among all sectors; Wind Hong Kong stocks and real estate sector rose or fell by – 5.2%, ranking 10th among all sectors. This week, the Hang Seng property service and management index rose or fell by – 12.6%, the Hang Seng China enterprise index rose or fell by – 8.1%, and the Shanghai and Shenzhen 300 index rose or fell by – 4.2%; The relative returns of the property index to Hang Seng China enterprise index and CSI 300 were – 4.4% and – 8.4% respectively.
The activity of homestead transaction is low this week. This week, the transaction and construction area of residential land in 300 cities across the country was 1.98 million square meters, with a month on week ratio of – 48%, a year-on-year ratio of – 87% and an average premium rate of 5%. Since the beginning of 2022, a total of 75.11 million square meters of residential land has been sold in 300 cities across the country, with a cumulative year-on-year increase of – 58%.
On Monday, the sales area of hand houses decreased month on month and year on year. This week (March 5-march 11), commercial housing transactions in 40 cities totaled 3.82 million square meters, with a week-on-week ratio of – 20% and a year-on-year ratio of – 46%. Among them, first tier cities: week on week – 12%, week on week – 46%; Second tier cities: Mom – 18%, yoy – 37%; Third and fourth tier cities: Mom – 34%, yoy – 70%.
This week, the transaction area of second-hand houses increased slightly month on month and decreased year on year. This week, a total of 1.41 million square meters of second-hand houses were sold in 17 cities, with a week-on-week increase of + 4% and a week-on-week increase of – 32%. Among them, first tier cities: week on week + 4%, week on week – 35%; Second tier cities: Mom + 5%, yoy – 26%; Third tier cities: Mom – 15%, yoy – 78%.
The medium and long-term loans of new residents are less than expected, and there is an urgent need for loose stimulation on the demand side. ① In February, China’s medium and long-term RMB loans to residents increased by – 45.9 billion yuan (year-on-year – 111%), which was negative for the first time since the statistics. The medium and long-term loans to residents were multi housing loans, and the new value-added was negative, indicating that the amount of new loans repaid in the current month was greater than the amount of loans, and the residents’ willingness to buy houses was low. ② Recently, many cities across the country have issued loose policies on credit, settlement and pre-sale fund supervision, but the short-term real estate market sales have not been boosted, and the sales of new houses have continued to decline. ③ Sales collection is an important source of real estate development funds, and its proportion has increased from 36% in 2014 to 53% in 2021. It is particularly important to promote the virtuous cycle and healthy development of the real estate industry, boost market confidence, ensure the recovery of sales and maintain the sustainable and stable development of real estate enterprises. We believe that it is urgent to further relax the demand side and drive sales growth.
The growth rate of land transfer fee income declined, and many cities relaxed the threshold of land auction. ① In 2021, the income from the use right of state-owned land was 8705.1 billion yuan, an increase of 3% year-on-year, with a sharp decline in the growth rate, the lowest growth rate since 2016. ② At present, the national land auction market is relatively depressed. Since the beginning of 2022, the transaction and construction surface of homestead has decreased by 58% year-on-year. Most of the participants in land auction are central enterprises, state-owned enterprises and local platform enterprises, and the willingness of private enterprises to acquire land is weak. ③ In 2022, a batch of centralized land supply and more underground land transfer auction participation thresholds were set. Compared with the third batch of land auction in 2021, Chongqing, Changsha, Chengdu, Wuhan, Hefei and other cities issued policies such as canceling the “self-supporting competition”, reducing the proportion of affordable housing, extending the payment cycle of land transfer fees, and Dongguan cancelled the sales price limit of new houses set last year. We expect that in order to maintain the activity of the land market, the policy easing at the local auction end will continue to increase in the future, and the land acquisition profit margin of real estate enterprises may be moderately improved.
Investment advice
It is expected that the real estate demand will be mainly stimulated by loose policies in the future. In the real estate sector, we are optimistic about the real estate enterprises with contrarian sales growth. We recommend Greentown China, China Construction Development International and Hangzhou Binjiang Real Estate Group Co.Ltd(002244) . In the property sector, we believe that after the sales stabilize, the liquidity crisis of the affiliated real estate enterprises of private property companies will be lifted, and the valuation repair flexibility is large. We recommend Jinke service and country garden service.
Risk tips
The real estate regulation policy is loose and less than expected; Market confidence continued to decline
