\u3000\u30001. Commercial housing sales:
In December, the mood of home buyers has not improved significantly, and sales have experienced double-digit negative growth for five consecutive months; House prices in 70 large and medium-sized cities fell for four consecutive months. In December, the monthly sales area was 213 million square meters and the sales volume was 2.03 trillion yuan, with a year-on-year growth rate of – 15.6% and – 17.8% respectively. The decline was 1.7 and 1.5 PCT larger than that of the previous month. The market demand is still weak and the wait-and-see mood is strong. In December, the average sales price was 9512 yuan / square, a year-on-year decrease of 2.5% and a month on month decrease of 0.9%. The same month on month growth has been negative for five consecutive months, and the house price is at the lowest point since the epidemic. Residential sales prices in 70 large and medium-sized cities with high energy levels also fell month on month for four consecutive months, with the number of falling cities reaching 50.
The annual growth rate of sales area was positive, slightly higher than the market expectation. The annual market showed obvious “high before low”, “strong in the East and weak in the west”, and the annual average sales price exceeded 10000 for the first time. In the 21st year, the sales area of commercial housing was 1.794 billion square meters, with a year-on-year growth rate of 1.9% (the growth rate in the 20th year was 2.6%); The sales volume was 18.19 trillion yuan, with a year-on-year growth rate of 4.8% (8.7% in 20 years); The average sales price was 10139 yuan / flat, with a year-on-year growth rate of 2.8%. In Q1, the sales area with a low base increased by + 63.8% year-on-year. Since Q2, the sales momentum has continued to weaken. On the one hand, the high heat in the early stage overdraw some house purchase demand, on the other hand, the regulation of hot cities has been increased, the credit has been tightened, and the mortgage interest rate has risen; Since the second half of the year, sales have taken a sharp turn for the worse. Since July, the sales area of a single month has turned negative (- 8.5%), showing a double-digit negative growth for five consecutive months. The year-on-year growth rates of sales in the East, West, middle and Northeast were 8.0%, 6.4%, – 2.8% and – 10.3% respectively. We expect that the growth rate of sales area in 2022 will be – 5.0 ~ – 3.5%. Among them, the heat of the first and second tier cities and the strong third tier cities may recover in the second half of the year, and the weak third and fourth tier cities will continue to decline.
\u3000\u30002. Investment in real estate development, new construction and completion:
The annual investment growth rate was 4.4%, which fell to the lowest in five years, which was consistent with our prediction, mainly caused by the failure of both land and Jian’an investment. The decline in market prosperity + land contraction + the tension in the capital chain of real estate enterprises led to double-digit negative growth in the growth rate of new construction throughout the year. In December, the real estate investment was 1.03 trillion yuan, a year-on-year decrease of 13.9%, an increase of 9.6pct over the previous month; The annual investment was 14.76 trillion yuan, with a year-on-year increase of 4.4% (7.0% in 2020), and the growth rate was the lowest since 2016. 1) Land investment: since the introduction of the “three red lines” financing rules, the overall land acquisition efforts of real estate enterprises have slowed down significantly. With the decline of sales boom, the land acquisition willingness of real estate enterprises has further decreased. 2) Construction and installation investment: the construction area has experienced double-digit year-on-year negative growth for six consecutive months, and the year-on-year decline in December is still as high as – 35.3% (previous value: – 24.7%). Land shrinkage + decline in market de urbanization rate + tension in the capital chain of real estate enterprises led to the slowdown of overall new construction and construction progress. In December, 161 million square meters of new construction was started, with a year-on-year decrease of 31.2%, an increase of 10.1pct, and a cumulative negative growth of 9 months; In the whole year, 1.989 billion square meters of new construction was started, a year-on-year decrease of 11.4%, which is basically in line with our original forecast. The completion of the project under the new year will be delivered on schedule and in large quantities. In December, the completed area was 327 million square meters, with a year-on-year increase of 1.9%, and the growth rate decreased by 13.5pct compared with the previous month. Recently, the supervision of guaranteed delivery buildings by local governments has been strengthened, and the completed scale in a single month is at the highest level in history. In the whole year, a total of 1.014 billion square meters were completed, with a year-on-year increase of 11.2%, which is basically in line with our previous prediction of completion or double-digit positive growth, and fulfilled the judgment of the new year of completion. On the one hand, it is due to the cashing pressure of the “new year of delivery”; On the other hand, real estate enterprises actively improve the “three red lines” index by increasing delivery and settlement to increase net assets.
We expect that investment will bottom out in Q2 in 2022, with an annual growth rate of 2.1% and a pull on GDP of 0.288pct. Since the average monthly decline of land transaction and construction in 100 cities in the second half of 21 years is as high as – 34.3%, the land investment and subsequent new construction in the next 1 ~ 2 quarters will continue to weaken, and the investment growth rate will face the pressure of continuous decline. At the beginning of the second quarter, we believe that the decline in land acquisition will be narrowed, and the downward pressure on land investment in the third and fourth quarters may be eased. At the same time, we expect the annual growth rate of new construction to be – 5.5%. After 21 years of decline in both sales and investment, real estate enterprises will be more cautious in judging the future market, and will still reduce the new construction plan before there is no substantial improvement in the market de urbanization rate and the financing environment. 22 years after the delivery year, the completion is expected to fall from a high level. We expect the completion growth rate to be 3.0 ~ 3.1%. Although indemnificatory housing will gradually enter the market in 22 years, which will support the construction area to a certain extent, the support is limited and it is difficult to change the low end of construction and installation investment. It is estimated that in 2022, the overall development investment lacks solid support, and the growth rate may further decrease, eventually falling to 2.1%.
\u3000\u30003. Developer funds:
Real estate enterprises are still under great pressure to put funds in place. In December, the funds of real estate enterprises reached 1.78 trillion yuan, a year-on-year decrease of 19.3%, an increase of 12.3pct over the previous month. The house payment was 954.5 billion yuan, a year-on-year decrease of – 21.5% (the previous value was – 7.9%), of which the growth rate of deposit and advance collection was – 3.2%, a decrease of 13 percentage points, while the growth rate of personal mortgage loans decreased by 2.8 percentage points to 7.8% compared with the previous month. In December, 355.8 billion yuan of medium and long-term loans were added to residents, down 39% month on month. We believe that in fact, the market sales momentum has not improved. In addition, some high-quality mortgage loans accumulated in October and November have been released, and the growth rate of personal mortgage loans fell sharply in December. Non housing loans amounted to 822.5 billion yuan, with a year-on-year growth rate of – 16.6% (previous value: – 6.1%), of which the growth rates of Chinese loans and self raised funds were – 31.6% and – 9.8% respectively (previous value: – 20.6% and 2.1%). China’s loan recovery is limited, or because the land acquisition of real estate enterprises has been greatly reduced recently, even if the bank has a development loan line, it has no projects that can be invested. Although there has been policy loosening at the financing end of real estate enterprise bonds, the scale of bond issuance is still less than the same period in 2020. In December, the real estate industry issued credit bonds of 46.14 billion yuan, a year-on-year decrease of 19.3%. In the whole year, the funds in place of real estate enterprises were 20.11 trillion yuan, a year-on-year increase of 4.2% (8.1% in 20 years). In the first half of the year, the capital in place was 15.15 trillion yuan, a year-on-year increase of + 11.1%. However, due to the high base, the limited financing channels at the supply side and the strict investigation of the funds of buyers at the demand side, the capital chain of real estate enterprises began to bear great pressure in the third quarter, with a year-on-year increase of – 8.4% in a single quarter. It has improved since October. On the one hand, mortgage lending has accelerated significantly, and some cities have shortened the lending cycle and lowered the mortgage interest rate; On the other hand, the central government attaches great importance to the pain point that the reasonable funds of real estate enterprises are met, and some financing channels are structurally supported. We believe that the capital environment of real estate enterprises will be improved under the influence of policies in 22 years, but the beneficiaries are still mainly central state-owned enterprises. If the capital chain of private enterprises can be marginally improved, it will be conducive to a virtuous circle of the industry.
Investment advice
Although the current situation of cooling sales investment, financing control and capital supervision is difficult to change in the short term, and the painful period of the industry will continue, we can also see that the necessary marginal adjustment has begun, and the industry consolidation is also accelerating. We expect marginal easing of liquidity and administrative policies at both ends of supply and demand. At the same time, we believe that the key to the virtuous cycle emphasized by the current policy lies in the chain operation of sales investment sales. At this stage, the sluggish sales has weakened the current willingness of real estate enterprises to acquire land and start new construction. The decline in land transactions and new construction has reduced the number of subsequent market entry projects, and there is further continuous downward pressure on sales. The negative transmission relationship makes it impossible for the industry to operate healthily. With the arrival of the bottom area of Q1 sales, the fundamentals will rebound, and the investment may bottom out in Q2 and begin to improve. From the perspective of sector investment, we still believe that the first quarter is a good configuration window period, the expectation of policy improvement is still strengthened, and the industry beta market after policy repair is worthy of attention. At that time, the valuation of second-line real estate enterprises with greater flexibility may be improved. In the short term, it is still recommended to pay attention to the head real estate enterprises. We suggest to pay attention to: 1) development sector: Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China Vanke Co.Ltd(000002) , Longhu group and China Resources Land. 2) Property sector: Country Garden service, Xuhui Yongsheng service, China Resources Vientiane life.
Risk tips
Real estate regulation continues to upgrade; Sales fell more than expected; Financing continued to tighten.
