The property market, I can't bear to look at it!
Author: Yu Fei
01
Macro data came in stronger than expected
Recently, the National Bureau of Statistics and the central bank released a series of macroeconomic data in the first two months of this year.
The National Bureau of Statistics discloses:
From January to February 2024, the added value of industrial enterprises above designated size increased by 7.0% year-on-year.
Source: National Bureau of Statistics
The growth rate of 7.0% was much higher than the 2.4% growth rate in the same period last year. This means that entering 2024, the manufacturing industry has a clear momentum.
In terms of industries, 39 of the 41 major industrial industries maintained a year-on-year increase in added value, an increase of 8 industries from the previous value.
The boom in the manufacturing industry is directly related to the recovery of exports.
According to data from the General Administration of Customs, from January to February, the total import and export volume of goods was 6,613.8 billion yuan, a year-on-year increase of 8.7%. Among them, exports were 3,752.3 billion yuan, up by 10.3 percent, and imports were 2,861.5 billion yuan, up by 6.7 percent.
Among them, the export delivery value of industrial enterprises above designated size increased by 0.4% from a year-on-year decline of 3.2% in December last year, an increase of 3.6 percentage points, ending the previous eight consecutive months of decline.
Among the major industrial products, the exports of railways, ships, aerospace, metal products, and general equipment increased by 32.6 percent, 20.4 percent, and 12.3 percent respectively; although the export growth rate of the automobile industry declined, it still maintained a double-digit growth rate of 13.0 percent; the export growth rate of the consumer goods manufacturing industry was driven by the improvement of overseas demand, and the export growth rate turned from a decline of 10.6 percent in December last year to an increase of 4.0 percent.
In terms of consumption data, the first two months increased by 5.5%, higher than the same period last year, and the growth rate as a whole is neither high nor low.
Source: National Bureau of Statistics
In terms of fixed investment, there has been a marked rebound.
In the first two months, fixed investment increased by 4.2 percent, which was not as fast as the 5.5 percent growth rate in the same period last year, but ended the downward trend of the past year.
Source: National Bureau of Statistics
On the whole, most of the macro data are stronger than expected.
However, the market believes that the follow-up pressure is still very high.
According to Caixin's analysis, the previously suppressed demand was released strongly during the Spring Festival holiday, but high-frequency data showed that the economic growth momentum slowed down from the holiday to March, and real estate sales, Spring Festival passenger traffic, vehicle cargo flow index and construction project resumption rate all weakened (according to the Spring Festival comparable caliber).
Source: Caixin
02
Real estate data can't bear to look at
Compared to other data, real estate data is simply unbearable.
Although other data weakened in March, the first two months were still beautiful, and the real estate data wilted all the way to the end.
The National Bureau of Statistics discloses:
In the first two months, the national real estate development investment was 1,184.2 billion yuan, down 9.0 percent year-on-year, of which residential investment was 882.3 billion yuan, down 9.7 percent.
Source: National Bureau of Statistics
The official interpretation is that the decline has narrowed.
Judging from the trend, there is nothing wrong with this, it has indeed narrowed, but the narrowing is still falling.
This data, since it turned negative in April 2022, has not returned to positive, although there was a period of narrowing the decline during the period, but it was only narrowing, and it did not change the downward situation of investment.
This means that the enthusiasm for land acquisition and construction in the real estate market has continued to decline for nearly two years. This result, anyone can think that after all, the current real estate companies are either in a thunderstorm or on the way to a thunderstorm.
Moreover, judging from Evergrande's financial fraud, this lead will tear off the fig leaf of many previously glamorous real estate companies.
In terms of commercial housing sales, the National Bureau of Statistics disclosed:
The sales area of newly built commercial buildings was 113.69 million square meters, a year-on-year decrease of 20.5%, of which the sales area of residential buildings decreased by 24.8%. The sales of newly built commercial buildings were 1,056.6 billion yuan, down by 29.3 percent, of which residential sales fell by 32.7 percent.
Source: National Bureau of Statistics
As can be seen from the trend chart, the sales volume and sales area are showing a diving trend.
Some people will definitely say that this is the influence of the Spring Festival factor. But it is clear that the method adopted by the National Bureau of Statistics is to compare the sum of January and February. Because the annual Lunar New Year corresponds to January or February in the solar calendar, the 2023 Spring Festival corresponds to January of that year, and 2024 corresponds to February. In order to avoid the interference of the Spring Festival factor, the first two months of each year are combined.
In the first two months of this year, the area of commercial housing sales fell by 20.5%, and the sales volume fell by 29.3%. This means that it is difficult to sell new homes.
This decline can also be echoed from the mortgage data released by the central bank.
The central bank disclosed that housing loans increased by 627.2 billion yuan in January this year, which is very good. However, the increase in February was -103.8 billion yuan, which was the sixth negative growth of housing loans since 2020.
It stands to reason that as long as there is a commercial housing transaction, the increase in housing loans cannot be negative, unless the number of loans is not as large as the number of repayments.
That is to say, in the property market in February, the amount of loans from banks for buyers could not catch up with the amount of repayment by old owners. You must know that although the increase in the Spring Festival month (January) in 2023 is not high, it is also 223.1 billion yuan.
This phenomenon is true regardless of the first, second, third, or fourth lines, whether it is eastern, central, western or northeastern.
Judging from the data of large plates, the four major sectors of the eastern, central, western and northeast sectors, whether it is real estate development investment, or the sales area and sales of commercial housing, all fell across the board.
Source: National Bureau of Statistics
Writing this, I suddenly remembered the forecast of China's property market in 2024 by two major international rating agencies, Standard & Poor's and Fitch, last year.
The "report" released by the international rating agency Standard & Poor's at the end of last year believes that 2024 is still the year of the bottom of real estate sales, but the market will not fall sharply again, and it is expected that the annual sales of commercial housing will fall by about 5% year-on-year.
Another rating agency, Fitch, said
In 2024, the sales volume of China's real estate market will continue to decline, but the decline will be narrowed to 0-5%, corresponding to a sales volume of about 10 trillion yuan. The real estate market will not rebound significantly like the previous two cycles, but will enter a new normal of slow decline.
The forecasts of the two rating agencies are expressed in different ways, but the view is basically the same: a slow downside will be the norm.
This number has also analyzed earlier that China's property market has been adjusted from the "Double 18" in 2021 to the "Double 13" in 2022, that is, the sales area of 1.8 billion square meters and sales of 18 trillion yuan have been adjusted to about 1.3 billion square meters and 13 trillion yuan respectively. Last year, it fell to "Double 11", the sales area of commercial housing fell to 1.117 billion square meters, and the sales fell to 11.66 trillion yuan, falling to "Double 11".
Graphics: City Finance and Economics, Data: National Bureau of Statistics
Graphics: City Finance and Economics, Data: National Bureau of Statistics
This is still not the bottom.
Some experts have predicted that the future real estate market may eventually be maintained at the level of 10 trillion under the balance between natural replacement demand and improved demand under the aging of houses.
10 trillion, I think it's still optimistic.
03
It's still early to talk about it
This round of adjustment cycle, referring to Japan, will be very long.
From the data level, population deflation is accelerating, and the main group of home buyers is shrinking rapidly.
Recently, the agency had a set of forecasts.
According to the theory of the authoritative China Index Research Institute of the real estate industry, 26-40 years old is the main force to buy a house and replace real estate, then the 40-year-old is 20.88 million born in 1984, and the 26-year-old is 15.85 million in 1998, so it is concluded that the main population of buying a house in 2024 will decrease by 5.03 million.
In the same way, it is predicted that the main demand for buying houses in the next few years will continue to decrease by 6.03 million in 2025, 9.04 million in 2026, 12.4 million in 2027, 11.67 million in 2028, 14.06 million in 2029, 14.14 million in 2030, 7.42 million in 2031, 6.07 million in 2032, 6.04 million in 2033, 3.6 million in 2034, 2.76 million in 2035, 530,000, and 300,000 in 2037。
Since then, the main population of buying houses has fluctuated within plus or minus 1 million.
In addition, the national real estate supply exceeds demand, and the management has set the tone through the statement that "the relationship between supply and demand of real estate in China has changed significantly".
At present, except for a few cities, the supply of housing is in excess of demand, and most cities, including most second-tier cities, are in excess of demand.
In the context of excessive supply and shrinking demand, it is inevitable that prices will continue to adjust. At present, all the rescue operations are nothing more than to prevent a hard landing and achieve a soft landing.