National real estate investment and sales statistics released by the National Bureau of real estate development from January to February 2022. From January to February, the sales area was 157 million square meters, a year-on-year decrease of 9.6% (previous value: – 15.6%); The amount of development investment was 1.45 trillion yuan, a year-on-year increase of 3.7% (previous value: – 13.9%); The newly started area was 150 million square meters, a year-on-year decrease of 12.2% (previous value: – 31.2%).
Comments
\u3000\u30001. Commercial housing sales:
From January to February, the growth rate of commercial housing sales area was – 9.6%, and the data level was better than the market expectation. From the structural point of view, the residential sales area still showed double-digit negative growth, reaching – 13.8%, rather than a substantial growth in housing; The growth rate of sales area in the eastern region, accounting for 40%, was – 17.8%, which was larger than that in December, while the growth rate in the central and western regions, accounting for 58%, was – 2.8%, which was significantly narrowed by 13.2pct compared with that in December. Although the overall decline has narrowed, the actual market is still relatively depressed, and the situation of market price for volume is becoming more and more obvious. First of all, from the perspective of sales area, the sales area of commercial housing in China from January to February was 157 million square meters, a year-on-year decrease of 9.6%, which was 6 percentage points narrower than that in December. The data level exceeded the market expectation. However, from the perspective of data structure, the exceeding expectation mainly came from the significant increase of non residential sales area, reaching 27.8%; However, from the perspective of housing alone, the sales area decreased by 13.8% year-on-year, and the double-digit negative growth is relatively more in line with expectations. From a regional perspective, the sales area of the eastern region in January and February was – 17.8% year-on-year, and the trend is still poor, which is also in line with our current tracking results of high-frequency data; However, the growth rate in Central China was – 2.2% and that in Western China was – 3.3%. The decline was significantly narrowed, which was inconsistent with the micro data. It can also be seen from the third-party data that the sales area of central and western cities from January to February was – 47.7% year-on-year, an increase of 15.6pct compared with the decline in December. Whether the central and western cities with low energy levels have really warmed up or the real estate enterprises have retreated. Secondly, they have strengthened the marketing stimulation of the central and western front. We think it still needs to be observed and should not be too optimistic in the short term. In addition, in terms of sales amount, the national commercial housing sales amount from January to February was 1.55 trillion yuan, a year-on-year decrease of 19.3%, an increase of 1.5 percentage points compared with December, which is in line with our expectations. Therefore, the average sales price has also decreased significantly, with a year-on-year decrease of 10.7%, which is also the largest decline since 2009, indicating that the market is “exchanging price for quantity”, reflecting that the current real estate sales fundamentals are still weak, and the effect of local easing policies at this stage is general. Therefore, the unexpected short-term data may not continue, and the market still needs further protection of policies in March and April. We expect that the sales area in 2022 will be – 5.0% – 3.5% year-on-year.
\u3000\u30002. Real estate development investment, new construction and completion:
The investment turns positive beyond expectation, and the volume and price at both ends of land and construction play a leading role; The decline in new construction was significantly narrowed. From January to February, the amount of development investment was 1.45 trillion yuan, with a year-on-year increase of 3.7%, 17.6 percentage points higher than that in December, ending the previous four consecutive months of negative growth, exceeding market expectations. We believe that this is mainly due to certain improvements in land investment and construction and installation investment. Last year, the trend of land transactions in Q4 picked up, driving the land investment in Q1 this year. Last year, the transaction area and amount of land in Q4 hundred cities increased by 47.0% and 46.7% respectively compared with Q3; The year-on-year growth rates were – 26.3% and – 19.2% respectively, which were significantly narrowed by 5.2 and 14.8 percentage points compared with Q3. It can be seen that the volume and price of land investment in Q4 last year improved, and gradually began to pay land funds and start construction in Q1 this year and included in real estate investment. In terms of construction and installation investment, both material cost and construction area contribute. PPI has remained at a high level since May 2021, with year-on-year growth rates of 9.1% and 8.8% in January and February respectively; The prices of upstream steel and cement are also relatively high. From the perspective of volume, although the construction growth rate is still low and the new construction is still negative, the year-on-year growth rate of construction area has changed from – 35% in December to 1.8%, and the decline of new construction has also narrowed. From January to February, the newly started area was 150 million square meters, with a year-on-year increase of – 12.2%, narrowed by 19 PCT compared with December, mainly due to the following two reasons: 1) the land trading volume and price rebounded in Q4 last year, and most projects started in Q1 this year; 2) New construction continued to be sluggish for nine months. After the external financing environment of real estate enterprises was slightly relaxed, the new projects previously suspended or hoarded began to start. We expect the growth rate of new construction in 2022 to be – 5.5% and the growth rate of development investment to be 2.1%. The completion slowed down from January to February; It is expected that the delivery will be guaranteed throughout the year, and the completion will still maintain a certain growth. From January to February, the completed area was 122 million square meters, a year-on-year decrease of 9.8%, and the growth rate was 11.7 percentage points lower than that in December. We believe that on the one hand, the capital pressure of real estate enterprises is still large, and the limited funds are used for new construction at this stage, so the completion is relatively slow in the short term; On the other hand, the beginning of the year is not the peak of completion. After the delivery year, the completion in 2022 is also expected to drop from a high level, but delivery still needs to be guaranteed throughout the year. We expect the completion growth rate to be 3.0 ~ 3.1%.
\u3000\u3000 3. Developer funds:
The decline of funds in place of real estate enterprises narrowed, but the range was limited; The decline in housing prices expanded again, and the decline in non housing prices narrowed slightly; The internal and external capital environment of real estate enterprises is still relatively tight. From January to February, the funds in place of real estate enterprises were 2.51 trillion yuan, a year-on-year decrease of 17.7% (previous value: – 19.3%). 1) Affected by the rate of sale and mortgage lending, the house payment increased by – 23.9% year-on-year (previous value: – 21.5%), of which the growth rates of deposit, advance payment and personal mortgage were – 27.0% and – 16.9% respectively, with a decline of 1.1 and 8.9pct respectively. On the one hand, the pressure of sales and shipment is still large due to the low DE chemical rate; On the other hand, the actual support for mortgage is weak. From the financial data released by the central bank in February, we can also see that the medium and long-term loans of residents decreased by 45.9 billion yuan month on month, showing the first negative growth since the data record,
From January to February, residents’ medium and long-term loans increased by 696.5 billion yuan, 659.6 billion yuan less than that in 2021 and 223 billion yuan less than that in the same period in 2019. Therefore, although the overall credit environment is relaxed, the support of mortgage has not been in place, and we still need to pay attention to the satisfaction of subsequent mortgage. 2) The improvement of non housing funds was not obvious, and the decline narrowed slightly to – 11.0% (previous value: – 16.6%). The external financing environment of real estate enterprises was indeed loose, but the effect was not obvious, and the overall decline was still large. From the perspective of Chinese loans, the year-on-year decline from January to February is still as high as 21.1%. Although it is improved from – 31.6% in December, it is still significantly lower than the annual growth rate of – 12.7% in 2021. The support for follow-up development loans is expected to be further improved.
In terms of self raised funds, from January to February, it decreased by 6.2% year-on-year, slightly narrowed by 3.5 percentage points compared with the decline in December, but the growth rate is still significantly lower than that of 2021 (3.2%). According to the data of China Index Institute, from January to February 2022, the total financing of credit bonds, overseas foreign debt, trust and ABS in the real estate industry amounted to 127.4 billion yuan, a year-on-year decrease of 67%. Recently, there have been frequent thunderstorms in real estate enterprises, and the overall financing end is still in the process of slow repair.
Investment suggestions:
According to our previous calculation, if we want to achieve the annual economic target of 5.5%, the growth rate of real estate investment needs to reach more than 2.1%. The higher than expected growth of real estate investment from January to February may mean that the introduction of strong and fast-paced real estate regulation policies may be eased, and the time node may be delayed. However, from the perspective of the effect of recent real estate policies, the boosting effect on the market is limited, and the sales fundamentals are still depressed; At the same time, real estate enterprises still face great financial pressure, the early credit support is not in place, and the industry will also usher in the debt repayment peak from March to April. Therefore, we believe that there is still room for continuous and further adjustment at the local level on the supply and demand side and the capital side of real estate enterprises, and the expectation of policy improvement is still in place. It is suggested to continue to pay attention to the opportunities of the real estate sector. 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.
Main risks of rating:
Real estate regulation continues to upgrade; Sales fell more than expected; Financing continued to tighten.
