In March, the month on month decline of sales narrowed, the year-on-year decline expanded, and xiaoyangchun missed the appointment.
From January to march of 22 years, the sales area of commercial housing in China was 310 million square meters, with a cumulative year-on-year decrease of – 13.78%, an increase of 4.21 percentage points compared with the cumulative year-on-year decrease from January to February. In March, the sales area was 153 million square meters, which was – 2.29% month on month and – 17.7% year-on-year compared with that from January to February. The month on month decline narrowed but the year-on-year decline expanded. From January to march of 22 years, the national commercial housing sales reached 2.97 trillion yuan, with a cumulative year-on-year decrease of – 22.73%, an increase of 3.45 percentage points compared with the cumulative year-on-year decrease from January to February. In March, the sales volume of the month was 1.42 trillion yuan, with a month on month decrease of – 8.17% and a year-on-year decrease of – 26.16%. The month on month decrease narrowed and the year-on-year decrease expanded. From the perspective of average sales price, the average sales price from January to march was 9552 yuan per flat, with a month on month decrease of – 2.97% from January to February, and the average monthly price in March was 9252 yuan per flat, with a month on month decrease of – 6.02%.
In March, the completed amount of real estate development investment increased negatively month on month.
From January to march of 22, the completed investment in real estate development was 2.78 trillion yuan, a year-on-year increase of + 0.7%, an increase of 3 percentage points compared with the cumulative year-on-year decrease from January to February. In March, the investment in real estate development was 1.33 trillion yuan, a month on month increase of – 8.51% and a year-on-year increase of – 2.39%. The year-on-year value of a single month in March has continued to grow negatively since September 2021 (except from January to February 2022). We mentioned in the data review in February that the rise in the price of upstream raw materials played a supporting role in the completion of real estate development investment from January to February, but the actual development investment demand is still facing short-term pressure. The data in March verified our view.
Land investment decreased by 40% year-on-year, and the year-on-year growth rate of newly started and completed areas increased.
The total land purchase area from January to march of 22 years was – 41.82% year-on-year, and the month on month in March was – 40.24% month on month and – 40.97% year-on-year. The downturn in the land market continued. We believe that when there is no obvious inflection point in sales, real estate enterprises lack confidence in land acquisition. In addition, the relief problem of real estate enterprises still needs to be solved, and the number of real estate enterprises capable of land acquisition has decreased sharply. The newly started area increased negatively in three quarters year-on-year, with a year-on-year increase of – 17.50% from January to march of 22 years, an increase of 5.3 percentage points compared with the decrease from January to February. The cumulative year-on-year growth rate of the completed housing area from January to march of 22 years was – 11.50%, 1.7 percentage points higher than the decline from January to February. The cumulative year-on-year growth rate of construction area from January to march was 1%, down 0.8 percentage points from January to February. The area growth rate of new construction and completion in March also narrowed month on month and expanded year-on-year.
The value of Chinese loans decreased sharply in the current month, and the decline of personal mortgage loans in the current month expanded year-on-year.
Among the sources of real estate development funds, Chinese loans and other funds account for about 67-68%. The cumulative amount of Chinese loans from January to march of 22 years was 552.5 billion yuan, a year-on-year decrease of – 23%, an increase of 2.4 percentage points compared with the cumulative year-on-year decrease from January to February. The amount in March was 142 billion yuan, a year-on-year – 30%, an increase of 8.63 percentage points over the decline from January to February. From the perspective of the proportion of sources of real estate development funds, the cumulative amount of Chinese loans from January to march in 22 years accounted for 14%, down 2 percentage points from January to February. Personal mortgage loans (in other funds) totaled 636.9 billion yuan from January to March, with a year-on-year decrease of – 18.8%. The amount in March was 224.5 billion yuan, with a month-on-month decrease of – 46% and – 22% year-on-year.
The central bank and the safe issued 23 measures to strengthen support for the real economy.
On April 18, the central bank and the State Administration of foreign exchange issued the notice on doing a good job in epidemic prevention and control and financial services for economic and social development, which mentioned that 1) reasonably determine the minimum down payment ratio and minimum loan interest rate of commercial individual housing loans within the jurisdiction, so as to better meet the reasonable housing needs of property buyers; 2) Increase support for high-quality projects, do not blindly withdraw loans, cut off loans and suppress loans, do not engage in “one size fits all”, and maintain the stable and orderly release of real estate development loans; 3) Increase the financing support of M & A bonds and actively provide financial advisory services for M & A. We believe that the central bank and the safe will guide the policy adjustment on both sides of the supply and demand of the real estate industry from the perspective of financial institutions. In terms of demand, the notice gave guidance to cities on the direction of loan restriction, paving the way for cities to boost and release reasonable demand by adjusting the down payment ratio and loan interest rate. On the supply side, the notice echoes the rescue landing mentioned by the CSRC and the national Standing Committee. We believe that subsequent financial institutions may increase the amount of M & A loans, issue M & A loans to more real estate enterprises and provide M & a related services.
Investment suggestion: the real estate sales and investment data in March showed an expanding trend of year-on-year decline. We believe that this is consistent with the repeated demand and delayed commencement and completion caused by the epidemic in key eastern cities. The cumulative sales and investment performance of the industry from January to march was poor, and the fundamentals of the real estate industry continued to bottom. In combination with the relaxation of policies at both ends of real estate supply and demand in early April, we believe that Q2 is the key time window for the relaxation of industrial policies and the stabilization of industrial fundamentals. We maintain the view that the strength and frequency of policies at both ends of Q2 are higher than Q1: the fundamentals are not stabilized, and the trend of policy relaxation remains unchanged.
Development sector: 1) high quality leading callback is the opportunity to increase positions: a – Poly Developments And Holdings Group Co.Ltd(600048) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China Vanke Co.Ltd(000002) , Gemdale Corporation(600383) ; H – China overseas development, China Resources Land and Longhu group; 2) Dark horse contrarian growth targets: a – Huafa Industrial Co.Ltd.Zhuhai(600325) , Beijing Capital Development Co.Ltd(600376) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) ; H – Greentown China, Yuexiu real estate, China Construction Development International, China Jinmao. At the same time, it is suggested to pay attention to the dilemma reversal of high-quality private enterprises: a – Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) ; H – Xuhui group, as well as Financial Street Holdings Co.Ltd(000402) , which has mastered the core assets of the core area and highlights the counter cyclical nature.
Property management sector: continue to recommend country garden services and Jinke services with low value and high growth targets.
Risk tip: the policy relaxation intensity and speed are weaker than expected, resulting in a long time for the industry to repair, local urban epidemics repeatedly drag down the industry repair progress, and individual real estate enterprise credit events interfere with the overall valuation repair of the sector.
