The bottom recovery time of sales growth is ahead of land acquisition and construction, and basically synchronized after 2020. In the three rounds of real estate cycles from 2008 to now (20082012, 20122015 and 2015 to now), the bottom recovery of sales price growth lags behind the growth of sales area by 2-4 months, the bottom recovery of land purchase growth lags behind the growth of sales area by 1-3 quarters, and the bottom recovery of new construction area lags behind the growth of sales area by about 2 quarters. After 2020, the narrowing of the difference between housing and land prices forces Housing enterprises to move towards high turnover, and the growth rate of sales area, land purchase and new construction basically converges.
The current inventory accounts for about a ninth of the historical high, and there will be no shortage of supply due to the recovery of sales before 2022. At present, the inventory is at an all-time high, and there are great differences between cities. As of February 2022, the inventory of newly-built commercial houses in 70 cities in China is 490 million m3, about 91% of the highest inventory in recent ten years (2015m1). The inventory of the first, second and third tier cities was 36 / 297 / 162 million m3 respectively, equivalent to 81% / 82.7% / 110.7% of the historical high respectively. Assuming that the growth rate of residential transaction construction area in 2022 is - 10% - 30%, and that of homestead transaction construction area in the first half of 2022 is - 20% - 40%, it is estimated that the corresponding range of inventory at the end of 2022 is 521 ~ 673 million m3, 95.8% ~ 123.8% of the highest point of historical inventory, and 14.8 ~ 24.5 months. Generally speaking, inventory will not be insufficient at the initial stage of sales recovery, and in most markets, the initial stage of sales recovery will not cause price impact.
Review of the historical relaxation cycle: in order to predict the policy relaxation path of this cycle, we compare the three cycles of 2008, 2014 and 2021, combined with China's commercial housing inventory and residents' leverage ratio, and draw the following conclusions: (1) the policy relaxation path of the two cycles in history is first on the demand side and then on the supply side. (2) The recovery of sales fundamentals lags behind the overall relaxation of policies for about 5-7 months. (3) The time from sales fundamentals to policy change varies, and the time for policy change is more when the new house price increases too much month on month. (4) The relaxation of purchase and loan restrictions is particularly critical.
Forecast of relaxation path in this cycle: China's urbanization rate and urban per capita residential area have reached a high level, the residents' leverage ratio has risen to 62.2%, and the total sales of commercial housing has peaked in a large cycle. The core point of this round of policy stimulus lies in the demand side (Sales) and enterprise capital side (financing). The tightening of the combined fist should correspond to the relaxation of the combined fist. We believe that this round of policies should achieve several goals: 1. Sales should be entrusted but not raised, and the bottom should be warmer rather than return to the high level; 2. Ensure the completion and delivery of the project of the accident enterprise; 3. Control unemployment in the process of industry liquidation; 4. The correction of house prices should be controlled within a reasonable range to avoid the sharp decline of house prices affecting the financial system;
The following are our policy suggestions for this round of relaxing the combination boxing: 1. Looking back at the history, the expected recovery of sales, and the purchase and loan restriction policies of core cities, core cities need to play a leading role. 2. With reference to the urban inventory, at least more than half of the second tier has the basis for comprehensively relaxing the purchase and loan restrictions, and follow-up relaxation can be considered; 2. The capital operation of the insurance enterprises is not smooth, the refinancing is almost stagnant, and it is difficult to obtain development loans for few new projects. At present, the capital flow mainly depends on sales, extension and disposal of projects. Financial institutions should meet the demands of reasonable extension, and non regulatory funds can be used freely. Since the land acquisition time of projects in hand is generally from 2018 to 2020, the land price is relatively high, and the core friction point of project disposal lies in the price. The government needs to intervene and coordinate all kinds of creditors to help enterprises dispose of some projects through buyers AMC / trust / state-owned enterprises / or even establish new funds to obtain short-term liquidity; 3. Regulate house prices to avoid excessive decline. 4. Guide the unemployed to enter other industries for employment.
Investment suggestion: it is expected that the introduction of policies will accelerate after the epidemic eases. The starting point of demand side policies is that more cities follow up and relax the purchase and loan restriction policies. Cities with high inventory and strong population economic support are more likely to introduce policies to maintain the "overweight" rating of the real estate development sector. We believe that this year is a large-scale policy easing cycle, which is a beta market. Real estate enterprises with good credit qualification, sufficient liquidity, sufficient soil reserves and high quality are the main choice. It is suggested to pay attention to: A shares Poly Developments And Holdings Group Co.Ltd(600048) , Hangzhou Binjiang Real Estate Group Co.Ltd(002244) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , Gemdale Corporation(600383) , Vanke A, Huafa Industrial Co.Ltd.Zhuhai(600325) , Jinke Property Group Co.Ltd(000656) , Seazen Holdings Co.Ltd(601155) ; H shares green city China, China Resources Land, China overseas development, Longhu group, China Jinmao, Xuhui holding group, China Overseas Hongyang. Property management: China Resources Vientiane, green city service, poly property, Yongsheng life service, country garden service, Jinke service, China Merchants Property Operation & Service Co.Ltd(001914) .
Risk warning: the epidemic situation repeatedly exceeded expectations; The tightening of epidemic prevention policies exceeded expectations; The downward trend of fundamentals exceeded expectations; The policy relaxation was less than expected.
