The National Bureau of statistics released the national real estate development investment and sales from January to March 2022. In March, the sales area was 153 million square meters, a year-on-year decrease of 17.7% (previous value: – 9.6%); The amount of development investment was 1.33 trillion yuan, a year-on-year decrease of 2.4% (previous value: 3.7%); The new construction area decreased by -1.22 billion year-on-year (the new construction area decreased by -1.22 billion year-on-year).
Comments
\u3000\u30001. Commercial housing sales:
Sales hit the biggest decline in a single month since the epidemic in early 20 years. The actual market is still relatively depressed, and the situation of market price for quantity is becoming more and more obvious. In terms of sales area, the national commercial housing sales area in March was 153 million square meters, a year-on-year decrease of 17.7%, an increase of 8.1 percentage points over the previous month, of which the residential sales area decreased by as much as 23.2%. Affected by the continuous downturn of the market, the general effect of early policies and the aggravation of the sudden epidemic, the monthly sales reached the largest decline since the epidemic from January to February 2020, and the double-digit negative growth met our expectations. From a regional perspective, the eastern and northeast regions were significantly affected by the outbreak in March. The year-on-year growth rate of sales area was – 23.8% and – 40.8% respectively, with a decline of 6.0 and 27.7 percentage points respectively; The growth rate in the central region was – 9.2%, and that in the western region was – 14.6%, with a decline of 7.0 and 11.3 percentage points respectively. In terms of sales amount, the national commercial housing sales amount in March was 1.42 trillion yuan, a year-on-year decrease of 26.2%, an increase of 6.9 percentage points over the previous month. The average sales price also fell sharply to 9252 yuan / square, down 6.0% month on month, with a year-on-year decrease of 10.3%. From the absolute value of the average sales price, it is the lowest point since the epidemic in March 2020, indicating that the market continues to “exchange 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. From the cumulative point of view, the sales area in the first quarter was 310 million square meters, a year-on-year decrease of 13.8%; The sales amount was 2.96 trillion yuan, a year-on-year decrease of 22.7%; The average sales price was 9552 yuan / flat, a year-on-year decrease of 10.4%. We expect that the market will still need further protection from policies in April and may. With the moderate liberalization of purchase and sale restrictions in many places, the reduction of the threshold for the use of provident fund and the continuous relaxation of credit, the housing demand in some cities will be released one after another, and the downward trend of sales is expected to be alleviated. It is expected that the bottom probability of sales will appear in May and June. We expect the sales area to be – 5.0% – 3.5% year-on-year in 2022.
\u3000\u30002. Real estate development investment, new construction and completion:
Affected by the downturn of construction and installation, the growth rate of investment has turned negative; The decline in new construction projects has expanded significantly. In March, the amount of development investment was 1.33 trillion yuan, a year-on-year decrease of 2.4%, and the growth rate decreased by 6.1 percentage points compared with the previous month. We believe that this is mainly due to the downturn of construction and installation investment. The construction area in March was 220 million square meters, a year-on-year decrease of 21.5%, and the growth rate decreased by 23.3 percentage points compared with the previous month; The new construction area was 149 million square meters, a year-on-year decrease of 22.2%, an increase of 10 percentage points over the previous month. We believe that, on the one hand, under the circumstances of sluggish sales and tight capital chain of real estate enterprises, the willingness of real estate enterprises to start new projects continues to be low; On the other hand, the outbreak has had a certain impact on new construction and construction, and some cities have obviously suspended work due to the epidemic. In terms of cumulative growth rate, the newly started area in the first quarter was 298 million square meters, a year-on-year decrease of 17.5%, and the investment in real estate development was 2.78 trillion yuan, a year-on-year increase of 0.7%. In the first quarter, the real estate investment can still maintain a positive growth, mainly because: 1) under the action of relevant policies such as guarantee and delivery, actively promote the resumption of construction and production of projects suspended in the early stage, and promote the construction of projects under construction. According to the spokesman of the National Bureau of statistics, the investment growth rate of real estate projects with a construction period of more than one year in the first quarter exceeded 10%. With the promotion of real estate project construction, the investment in construction and installation projects in real estate development investment in the first quarter increased by 0.9% year-on-year, driving the growth of real estate investment by more than 0.5 percentage points; 2) The rebound of land transaction trend in Q4 last year led to the land investment in Q1 this year. The land purchase fee in the early stage drove the growth of real estate development investment by more than 0.1 percentage points in the first quarter; 3) Since this year, the prices of building materials and engineering installation have increased relatively, which has pushed up the nominal growth rate of real estate investment to a certain extent. PPI has remained at a high level since May 2021, with a year-on-year increase of 8.7% in the first quarter. 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%.
Completion continued to slow down in March; It is expected that the delivery will be guaranteed throughout the year, and the completion will still maintain a certain growth. In March, the completed area was 47.29 million square meters, a year-on-year decrease of 15.5%, an increase of 5.7 percentage points over the previous month. We believe that on the one hand, the capital pressure of real estate enterprises is still large, and some real estate enterprises take the initiative to stop and delay some projects according to the rhythm of their own cash outflow and inflow; On the other hand, the outbreak of the epidemic has led to the substantial suspension of some projects, so the completion of the project has slowed down in the short term. At the same time, the first quarter was not the peak of completion, with a cumulative completed area of 122 million square meters in the first quarter, a year-on-year decrease of 9.8%. We believe that after the delivery year, the completion in 2022 is also expected to decline 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\u30003. Developer funds:
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. In March, the funds of real estate enterprises reached 1.30 trillion yuan, a year-on-year decrease of 23.0% (previous value: – 17.7%); In the first quarter, the funds in place of real estate enterprises were 3.82 trillion yuan, a year-on-year decrease of 19.6%. 1) Affected by the sales de conversion rate and mortgage lending, the house price increased by – 32.9% year-on-year (previous value: – 23.9%), of which the growth rates of deposit, advance payment and personal mortgage were – 37.5% and – 22.1% respectively, with the decline rate expanding by 10.4 and 5.2 percentage points 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 of mortgage is weak. In the first quarter, residents’ medium and long-term loans increased by a total of 1.07 trillion yuan, an increase of 910 billion yuan less than the same period in 2021, with a year-on-year decrease of 46%. It can be seen that although the overall credit environment is relaxed and the amount of mortgage loans is sufficient, due to the low transaction and low actual demand, the supply of overall housing loans exceeds the demand, we still need to pay attention to the actual availability of subsequent mortgages. According to the data released by the shell Research Institute, in March 2022, the loan interest rates of the first and second homes in 103 key cities were 5.34% and 5.60% respectively, down 13 and 15bp respectively month on month, the largest decline in a single month since 2019; The average lending cycle is 34 days, which is 4 days shorter than that of the previous month; At the same time, according to our statistics, at least 17 cities have reduced the proportion of down payment. 2) The decline of non housing funds narrowed slightly, but the improvement was not obvious. The decline narrowed slightly to 9.9% (previous value: – 11.0%). The external financing environment of real estate enterprises was indeed loose, but the effect was not obvious. From the perspective of Chinese loans, the year-on-year decline in March was still as high as 23.5%, an increase of 2 percentage points over the previous month, and the support for follow-up development loans is expected to be further improved. In terms of self raised funds, it decreased by 4.8% year-on-year in March, slightly narrowed by 1.4 percentage points compared with the previous month. According to the data of the central index Institute, the issuance scale of credit bonds, overseas foreign debt, trust and ABS in the real estate industry totaled 105.1 billion yuan in March. Although the year-on-year decline was still 23%, it was significantly narrowed compared with – 60% in February.
Previously, there were frequent thunderstorms in real estate enterprises. The period from March to April is the concentrated maturity period of real estate enterprises’ debts. The risk appetite of financial institutions and bond investors is still greater than the impact of policies, and the overall financing end is still in the process of slow repair.
Investment suggestions:
Judging from the effect of the recent real estate policy, the current policy adjustment is mainly concentrated in the third and fourth tier and weak second tier provincial capital cities, so the boosting effect on the overall market is limited, and the sales fundamentals are still depressed; 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%. According to the current market prosperity, if it continues, the overall real estate investment will be under great pressure throughout the year; At the same time, real estate enterprises are still facing great financial pressure, the early credit support is not in place, and the industry will also usher in the debt repayment peak in April, June and July. Therefore, we believe that the policy adjustment on the supply and demand side and the capital side of real estate enterprises at the local level is expected to be further strengthened, and the policy adjustment will gradually enter the stage of promoting demand improvement from relief. The cities introduced will gradually expand from third and fourth tier and weak second tier cities to more second tier and even strong second tier cities, and the intensity and pace of adjustment are expected to be further increased and accelerated. From the perspective of sector investment, it is still a good configuration window period. We suggest paying attention to four main lines: 1) the leading real estate enterprises of central state-owned enterprises with nationwide layout have been boosted by valuation in the last stage, but will still enjoy the rising space brought by the beta Market: Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Longhu group and China Resources Land; 2) Regional leading central state-owned enterprises and high-quality private enterprises, but the quality of cash flow and financial report is good: China Construction Development International, Yuexiu real estate, Midea real estate, Hangzhou Binjiang Real Estate Group Co.Ltd(002244) ; 3) After the policy becomes clearer, we can focus on the subject of elastic reversal: Xuhui holding group, Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) , country garden. 4) At present, the real estate post cycle property sector with strong income determination and accelerated concentration, as well as the recent credit risk mitigation of related real estate enterprises and elastic reversal: Country Garden service, Xuhui Yongsheng service, poly property, Zhonghai property and xinchengyue service.
Risk tips:
Real estate regulation continues to upgrade; Sales fell more than expected; Financing continued to tighten.
