Sales are still at the bottom stage, and we look forward to greater support policies. From January to March 2022, the sales area and sales amount decreased by 13.8% and 22.7% respectively. In a single month in March, the growth rates of sales amount and sales area were – 18% and – 26% respectively. Compared with – 8pct and – 7pct of the previous month, the prosperity has been worse than any period since 2010. At present, sales are still in the bottom stage. It takes time for the improvement of the epidemic situation and the recovery of house purchase confidence. In March, the average sales price of housing was 9671, with a year-on-year increase of – 8% and a month on month increase of – 5%. The decline in the average sales price reflects the sales strategy of real estate enterprises to exchange price for volume. At present, the supply side and demand side policies are gradually strengthened, and the relaxation of policies in various regions is also gradually increasing. However, compared with the policy rhythm of 14-15 years, the degree of relaxation in all dimensions is far from enough. We look forward to greater support for the introduction of policies in the future.
Affected by capital and sales expectations, the land market is still depressed, and the premium rate is at a historically low level. From January to March 2022, the land purchase area and land transaction price decreased by 41.8% and 16.9% respectively year-on-year. In March, the growth rate of land purchase area in a single month was – 41%, up 1PCT from the previous month. Affected by capital and sales expectations, land transactions are still very depressed. In March, the land area of Baicheng was – 74.22% year-on-year, and the land premium rate of Baicheng was 3.2%, both of which were historical lows since 2010.
The three factors of sales and land acquisition have led to the downturn of construction, and the construction and completion have certain support under the guidance of “guaranteed delivery”. From January to March 2022, the new construction area decreased by 17.5% year-on-year, and the single month growth rate in December was – 22%. Under the expectation of “double weakness” in sales and land acquisition, and superimposed with repeated epidemic factors, the current construction situation is worse than that in any period in history. The cumulative year-on-year growth rate of construction area from January to march is 1.0%, and the single month growth rate in March is – 21%. Ensuring delivery is still the first priority, and the construction will be supported to a certain extent; The completed area has decreased by 11.5% year-on-year, and the single month growth rate in March is – 15.5%. The decline rate of completion is likely to be affected by funds. Like construction, it is guided by the goal of “guaranteed delivery of buildings”. The completion cycle is not over, but the growth rate will be lower than 21 years.
The growth rate of development investment continued to decline. From January to March 2022, the completed investment in national real estate development increased by 0.7% year-on-year, and the single month investment growth rate in March was – 2.4%. Due to the sharp decline in land transactions, the development investment is mainly supported by construction. At present, there is no sign of recovery in the construction and land market, and investment will continue to decline in the second quarter.
The funds available for real estate fell in an all-round way, and the insufficient demand led to a further decline in sales collection. In a single month in March, the growth rate of funds in place was – 23%, a decrease of 5pct compared with the previous month. Among them, the growth rates of Chinese loans, self raised funds, personal mortgage loans, deposits and advance receipts were – 30%, – 2%, – 22% and – 37% respectively, and – 9pct, + 4pct, – 5pct and – 10PCT respectively compared with the previous month.
Investment suggestion: at the current time point, we believe that the main line of “steady growth” will run through the whole year. At present, the meaning of supporting the market is obvious from the central and local levels. Under the background of increasing downward pressure on fundamentals, the local policies will be intensively adjusted from April to June, and the policy strength and space of “steady growth” are worth looking forward to. Under the main line of “stable growth”, the market interpretation path is gradually clear, and there is still room for central state-owned enterprises to rise. At the same time, the market is gradually transitioning from central state-owned enterprise housing to private enterprise housing and property management companies. We suggest paying attention to the leading stocks in the high-quality housing development industry: China Vanke Co.Ltd(000002) ( China Vanke Co.Ltd(000002) ), Poly Real Estate ( Poly Developments And Holdings Group Co.Ltd(600048) ), Gemdale Corporation(600383) ( Gemdale Corporation(600383) ), China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ( China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) ), Seazen Holdings Co.Ltd(601155) ( Seazen Holdings Co.Ltd(601155) ), Jinke Property Group Co.Ltd(000656) ( Jinke Property Group Co.Ltd(000656) ). It is suggested to pay attention to high-quality property management companies: China Merchants Property Operation & Service Co.Ltd(001914) ( China Merchants Property Operation & Service Co.Ltd(001914) ), Xuhui Yongsheng service (1995. HK), New Dazheng Property Group Co.Ltd(002968) ( New Dazheng Property Group Co.Ltd(002968) ).
Risk warning: the risk of sales decline exceeding expectations and the risk of policy implementation falling short of expectations.
