Text/Xie Yifeng
On March 18, a group of statistical department data showed that in the first two months of 2024, the sales area of newly built commercial housing in the country was 113.69 million square meters, a year-on-year decrease of 20.5%. The sales volume was 1.0566 trillion yuan, a decrease of 29.3%, an increase of 12% and 22.8% compared with the year-on-year decline at the end of 2023, and the monthly sales area and sales have declined for 26 consecutive months.
In the first two months of 2024, the national commodity housing price was 9,294 yuan/square meter, down 9.0% (8.95%) year-on-year, and the residential housing price was 9,652 yuan/square meter, down 8.6% (8.58%) year-on-year. In 2023, commodity housing prices will rise by 6.4% year-on-year, and residential housing prices will increase by 6.6% year-on-year. In a single month, the month-on-month has fallen for 8 consecutive months, falling for the first time year-on-year.
The author believes that based on the base factor of the same period last year, except for the 0.6% decline in investment, other real estate market indicators show a deepening trend of decline, indicating that the current real estate market is still in a deep adjustment, and the rescue effect of a series of policies at both ends of supply and demand in the early stage is poor, and the rescue plan needs to be expanded.
In the first two months of 2024, the sales area of commercial housing nationwide fell by 20.5% year-on-year, the eighth highest decline in history since the same period in 2022, and the sales amount fell by 29.3% year-on-year, the third highest decline in history since the same period in 2022. It shows that the current real estate industry continues to clear, continue to probe the bottom, and the signs of bottoming remain unchanged.
The decline in market indicators expanded, including the construction area, the newly started area, the completed area, the sales area of commercial housing, the sales amount, the average price of commodities, the funds in place of real estate enterprises, and the prosperity index. The decline narrowed in the amount of development investment, the amount of land purchased, and the area of land purchased, and only the land price of purchased land and the inventory of commercial housing increased.
The first is the amount of investment, which has narrowed. In the first two months, the national real estate development investment was 1,184.2 billion yuan, down 9.0 percent year-on-year, and the decline narrowed by 0.6 percent. The year-on-year cumulative decline has been 24 consecutive months, and the decline in development investment has narrowed, showing a trend of marginal improvement and bottom repair.
Among them, residential investment was 882.3 billion yuan, down 9.7%, an increase of 0.4% from the decline at the end of 2023. The office building was 5.79 million square meters, down 3.2%, 6.2% narrower than the decline at the end of 2023. commercial business buildings were 8.94 million square meters, down 7.0%, 9.9% narrower than the decline at the end of 2023.
The decline in development investment has narrowed, showing the effect of marginal improvement and repair, and the policy transmission to investment has poor effect and slow recovery. From 2013 to 2023, the national real estate development investment increased by 19.8%, 10.5%, 1.0%, 6.9%, 7.0%, 9.5%, 9.9%, 7.0%, 4.4%, down 10.0%, down 9.6%, and decreased by 9.6% from 2022 to 2023.
Real estate development investment has produced positive changes in the first two months, and the decline has narrowed by 0.6% compared with the whole of 2023, which is a positive signal that the supply side has stabilized. It is revealed that the sentiment of the real estate market has stabilized and improved to a certain extent, and the overall total development investment has returned to the level of the same period from 2018 to 2019.
The main reason is that the decline in the amount of land purchased, the area of land purchased, the promotion of the financing coordination mechanism, and the "three major projects" since 2023 have become an effective support for the stabilization of real estate development investment in the future. Among them, more than one trillion yuan of credit has been granted for the reconstruction of urban villages, and the construction of public infrastructure for affordable housing and emergency use has been accelerated.
In terms of sub-regions, the largest decline in development investment was in the northeast region, followed by the western region, the central region, and finally the eastern region. The amount of development investment in the eastern region fell by 5.6% year-on-year, which was much smaller than that of other regions. In terms of property types, the decline in development investment widened because of the large decline in residential and commercial investment.
In terms of single-month data, since March 2022, the single-month decline has been 24 consecutive months, showing a bottom-out repair trend. In the first two months, the national real estate development investment was 1,184.2 billion yuan, down 9.0 percent year-on-year, and the decline narrowed by 0.6 percent. The main downward pressure comes from the tight cash flow of real estate enterprises, and the area of new construction, land purchase, and amount continue to decline sharply.
The second is the supply side. In the first two months, the housing construction area of real estate development enterprises nationwide was 6,669.02 million square meters, a year-on-year decrease of 11.0% (an increase of 3.8% from the end of 2023), and a cumulative decline for 26 consecutive months, showing the effect of marginal improvement and restoration.
Among them, the residential construction area was 4,666.36 million square meters, a decrease of 11.4% (an increase of 3.7% from the end of 2023). The office building was 275.74 million square meters, a year-on-year decrease of 9.7% (an increase of 2.0% from the end of 2023). commercial business buildings were 586.18 million square meters, down 11.5% year-on-year (1.9% more than the decline at the end of 2023).
From 2013 to 2023, the construction area of real estate development enterprises in the country increased by 16.1%, 9.2%, 1.3%, 3.2%, 3.0%, 5.2%, 8.7%, 3.7%, 5.2%, 7.2%, 7.2%, and 7.2% respectively, and the average decline from 2022 to 2023 has been declining for more than 2 consecutive years.
In terms of single-month data, since August 2021, the single-month decline has been 31 consecutive months, showing a bottom-up repair trend, and the year-on-year decline has continued to narrow, but the recovery is very slow. The main reasons are the high base last year, the continuous decline in the area of new construction, completion, and sales of commercial housing, as well as the continuous rise in the inventory of commercial housing.
In the first two months, the area of new housing construction in the country was 94.29 million square meters, a decrease of 29.7% (an increase of 9.3% from the decline at the end of 2023). The year-on-year cumulative decline has been for 32 consecutive months, showing the effect of marginal improvement and repair, and the policy transmission to investment is poor, and the recovery is slow.
Among them, the area of new residential construction was 67.96 million square meters, a decrease of 30.6% (an increase of 9.7% from the decline at the end of 2023). office buildings were 25.89 million square meters, down 12.2% (6.3% larger than the decline at the end of 2023). commercial business buildings were 6.02 million square meters, a decrease of 30.6% (an increase of 10.2% from the end of 2023).
From 2013 to 2023, the area of new housing construction of real estate development enterprises in the country increased by 13.5%, decreased by 10.7%, decreased by 14%, decreased by 8.1%, 7.0%, 17.2%, 9.2%, decreased by 1.9%, decreased by 11.4%, decreased by 39.4%, and decreased by 20.4% respectively, which has been declining for three consecutive years.
The new construction has continued the trend of low-level operation since 2023, and the willingness of enterprises to start construction has not improved significantly. The main reason is that the market sales are weak, and the cash flow pressure of enterprises has not been alleviated. In the past few years, nearly half of the land supplied by the city has been taken by the urban investment company, and the urban investment itself has a low operating rate, which has dragged down the restoration of new construction to a certain extent.
At present, the focus of real estate enterprises is on commodity sales and destocking, which has led to an expansion in the decline in new construction data, which is mainly directly related to the decline in the data of the area and amount of land purchased by real estate companies in the past few years. The number of new projects started by real estate enterprises has decreased, and the new projects of state-owned enterprises, central enterprises and urban investment have started slowly.
In terms of monthly data, since July 2021, the area of new housing construction of real estate development enterprises began to decline, and it has declined for 33 consecutive months in a single month, showing a trend of bottom repair, slow repair speed, and poor policy transmission effect. The weak recovery of sales, the unstable market foundation, the low confidence of home buyers, and the shortage of corporate funds have led to the long-term low-level operation of new starts.
In the first two months, the area of housing completions nationwide was 103.95 million square meters, a decrease of 20.2% (an increase of 3.2% from the end of 2023), a year-on-year increase for 12 consecutive months, and the growth rate fell for the first time after falling back for three consecutive months. The area of completions, which performed well last year, also failed to continue its growth momentum, and the growth rate turned from positive to negative in the first two months.
Among them, the area of residential completions was 76.94 million square meters, a decrease of 20.2% (an increase of 3.0% from the decline at the end of 2023). office buildings were 2.75 million square meters, down 14.5% (2.7% more than the decline at the end of 2023). commercial buildings were 7.41 million square meters, down by 23.4% (from rising to falling).
From 2013 to 2023, the completed area of real estate development enterprises in China increased by 2.0%, 5.9%, 6.9%, 6.1%, 4.4%, 7.8%, 2.6%, 4.9%, 11.2%, 15.0%, and 17.0% respectively.
According to the monthly data, the completed area of commercial housing has ended the positive growth momentum of nearly a year. The absolute value of the completed area of commercial housing in the first two months was the second lowest since 2013, only higher than that in January-February 2020. There is no doubt that the year-on-year growth rate of the completed area of commercial housing has declined sharply, mainly related to the rapid increase in the base in the same period last year.
The third is the land side. In the first two months, the area of housing and land purchased and the amount of land purchased across the country ran at the bottom, and the decline expanded, and the cumulative area of land purchased decreased year-on-year for 5 years and 2 months, and fell for 62 consecutive months. Since 2023, the data on the area of housing and land purchased and the amount of land purchased nationwide have not been released.
From January to February 2019, the land purchase area of real estate enterprises was 15.45 million square meters, a year-on-year decrease of 34.1%, and the land transaction price was 69 billion yuan, a decrease of 13.1%. From January to February 2020, the land purchase area of real estate enterprises was 10.92 million square meters, a cumulative decrease of 29.3%, and the land transaction price was 44 billion yuan, a decrease of 36.2%.
From January to February 2021, the land purchase area of real estate enterprises was 14.53 million square meters, a year-on-year increase of 33.0%, and the land transaction price was 50.3 billion yuan, an increase of 14.3%. From January to February 2022, the national land purchase area was 8.38 million square meters, a year-on-year decrease of 42.3%, the largest decline in 25 years, and the land transaction price was 36.9 billion yuan, a year-on-year decrease of 26.7%.
In 2010, the land area purchased by real estate enterprises nationwide was 399 million square meters, an increase of 25.2%. In 2011, it was 443 million square meters, an increase of 10.9%. In 2012, it was 356 million square meters, a negative growth of 19.5%. In 2013, it was 388 million square meters, an increase of 8.8%. In 2014, it was 333 million square meters, a negative growth of 14%.
In 2015, it was 228 million square meters, a negative growth of 31.7%. In 2016, it was 220 million square meters, a negative growth of 3.45%. In 2017, it was 255 million square meters, an increase of 15.8%. In 2018, it was 291 million square meters, an increase of 15.2%. In 2019, it was 258 million square meters, a negative growth of 11.4%. In 2020, it will be 255 million square meters, with a negative growth of 1.1%.
In 2021, it will be 215 million square meters, with a negative growth of 15.45%. In 2022, it will be 100 million square meters, with a negative growth of 53.4%. In 2023, it is estimated that the land purchase area of real estate enterprises nationwide will be 90 million square meters, a year-on-year decrease of more than 20%. Judging from the data, the land purchase area of real estate enterprises fell below 100 million square meters, which has been declining for five consecutive years.
The fourth is the demand side. In the first two months, the sales area of newly built commercial housing in the country was 113.69 million square meters, a year-on-year decrease of 20.5%, (an increase of 12% from the end of 2023), a cumulative year-on-year decline of 26 months, and a trend of expanding the decline, indicating that the foundation for the stabilization of the bottom of sales is not solid and is in the bottoming stage.
Among them, the residential sales area was 95.59 million square meters, a decrease of 24.8% (an increase of 16.6% from the decline at the end of 2023). The office building was 2.68 million square meters, a decrease of 14.9% (an increase of 5.9% from the decline at the end of 2023). commercial business space was 6.97 million square meters, a decrease of 17.3% (an increase of 5.3% from the end of 2023).
In terms of local regions, the largest decline in the area of commercial housing sales was 24.0% in the central region, followed by 21.7% in the west, 19.1% in the northeast, and finally 17.7% in the east. The largest decline in sales was 31.0% in the east, followed by 28.6% in the middle, 25.3% in the west, and 25.7% in the northeast.
From 2013 to 2023, the sales area of commercial housing in the country increased by 17.3%, decreased by 7.6%, 6.5%, 22.5%, 7.7%, 1.3%, decreased by 0.1%, 2.6%, 1.9%, decreased by 24.3%, and decreased by 8.5% respectively. The area of commercial housing sales has been declining for more than two consecutive years.
In terms of single-month data, it has declined for 26 consecutive months, indicating that the foundation for stabilizing at the bottom is not solid and is in the bottoming stage. It is normal for the data to decline, mainly because the sales base in the same period last year is relatively high, and it is expected that real estate companies will adjust prices, policies will continue to be favorable, and the demand for improvement will be released, and sales will gradually narrow.
The weakening of commercial housing sales is mainly closely related to the continued sluggish supply of commercial housing, and the enthusiasm of real estate companies to launch in the first two months is not high, and the supply area of commercial housing has fallen by more than 20% year-on-year. However, the expectation and confidence of buying a house are still recovering, and the visits and subscriptions of micro projects in most cities continue to decline.
In the first two months, the sales of new commercial housing in the country were 1.0566 trillion yuan, a decrease of 29.3% (an increase of 22.8% from the end of 2023), a cumulative decline of 26 months year-on-year, and a trend of expanding the decline, indicating that the price for volume of real estate enterprises has become the mainstream trend of the market, and the foundation for sales stabilization is not solid, and it is in the bottoming stage.
Among them, residential sales were 922.7 billion yuan, down 32.7% (26.7% more than the decline at the end of 2023). office buildings were 33.2 billion yuan, an increase of 9.9% (stopped falling and rose). commercial buildings were 68.9 billion yuan, down 12.5% (3.2% more than the decline at the end of 2023).
The decline in the sales amount of commercial housing exceeded the sales area, mainly due to the current trend of "exchanging price for volume" in the current market, and the average transaction price of commercial housing fell for two consecutive months, while the average transaction price of residential buildings from January to February decreased by 10.5% (8.6%) compared with the same period last year. Housing prices in 70 large and medium-sized cities collectively fell year-on-year in February.
At present, the real estate industry as a whole is in the trend of bottoming, bottoming out and adjusting, and the pressure on sales should not be underestimated. The absolute value of sales area and value in the first two months was a new low in the same period of 7 years (excluding the impact of the epidemic in 2020), and the year-on-year decline was 12% and 26% larger than that of the same period in 2023.
The fifth is the inventory side. At the end of February, the area of commercial housing for sale in the country was 759.69 million square meters, a year-on-year increase of 15.9% (3.1% narrower than the growth rate at the end of 2023). The inventory of commercial housing exceeded 718.53 million square meters in 2015, the highest since 1987. Most of the 760 million square meters are existing house inventory, and some off-plan houses are mostly houses to be delivered and cannot be sold.
The de-commercialization cycle of commercial housing reached 7.74 months, all of which broke through historical highs. As the inventory of commercial housing continues to rise, the sales collection is depleted, resulting in a very serious problem of capital turnover of real estate enterprises, and the risk of asset depreciation is transmitted by the cash flow emergency, and the debt is concentrated and mature, facing a greater debt risk.
The inventory of commercial housing has reached a record high, indicating that there is a large supply of houses. Different from the high inventory in the past, the shrinking state of real estate investment and land acquisition in the past two years is related, and it is also related to the policy of guaranteeing the delivery of buildings. Due to the promotion of the policy of guaranteeing the delivery of buildings, some existing houses were not delivered on time.
Among them, the residential area for sale was 405.00 million square meters, an increase of 23.8% (an increase of 1.6% compared to the end of 2023). The office building was 51.13 million square meters, an increase of 8.4% (8.7% narrower than the growth rate at the end of 2023). commercial business space was 144.37 million square meters, an increase of 3.6% (9.7% narrower than the growth rate at the end of 2023).
The commercial inventory depletion period is more than 36 months, slightly longer than the previous month, and the pressure on the destocking of housing is still large, and the inventory scale has exceeded the level of 2014. The area of commercial housing for sale hit a record high in 2015, began to decline gradually in 2016, and fell to 498.50 million square meters in 2020, and the inventory in 2023 has almost reached the level of 2016.
In the first 1 month, the inventory of commercial housing was 759 million square meters, which has exceeded 2015 and reached the highest peak in history. 492.95 million square meters in 2013, 621.69 million square meters in 2014 and 718.53 million square meters in 2015. 695.39 million square meters in 2016, 589.23 million square meters in 2017 and 524.14 million square meters in 2018.
498.21 million square meters in 2019, 498.50 million square meters in 2020, 510.23 million square meters in 2021, 563.66 million square meters in 2022, 672.95 million square meters in 2022, returning to the 2016 level of 600 million square meters, and 672.95 million square meters of commercial housing for sale in the country at the end of 2023, a year-on-year increase of 19.0%.
The sixth is the price side. In the first two months of 2024, the national commodity housing price was 9,294 yuan/square meter, down 9.0% (8.95%) year-on-year, and the residential housing price was 9,652 yuan/square meter, down 8.6% (8.58%) year-on-year. In 2023, commodity housing prices will rise by 6.4% year-on-year, and residential housing prices will increase by 6.6% year-on-year. In a single month, the month-on-month has fallen for 8 consecutive months, falling for the first time year-on-year.
In the first two months, the growth rate of the average sales price of commercial housing declined rapidly, mainly compared with the rapid increase in the base period value of the same period last year. At present, the adjustment of housing prices in various places is large, and the trend of real estate enterprises exchanging price for volume. The purpose is to better destock and boost sales, quickly recover sales, and cope with debt maturities, indicating that house prices are still in the adjustment stage.
In 2023, the average sales price of commercial housing in China will be 10,437 yuan/square meter, an increase of 6.4% year-on-year, rising for 12 consecutive months, showing a narrowing trend. From 2013 to 2023, the average sales price of commercial housing increased by 7.7%, 1.3%, 7.4%, 10.1%, 5.6%, 10.5%, 6.6%, 5.9%, 2.8%, down 3.2% and 6.4% respectively.
In 2023, the average national residential sales price will be 10,864 yuan/square meter, an increase of 6.6% year-on-year, rising for 12 consecutive months, showing a narrowing trend. From 2013 to 2023, the average annual residential sales price increased by 7.73%, 1.41%, 8.79%, 11.5%, 5.70%, 12.2%, 8.69%, 7.45%, 4.16%, decreased by 2.0%, and 6.6% respectively.
The seventh is the funds in place for real estate enterprises. In the first two months, the funds in place for real estate development enterprises nationwide were 1,619.3 billion yuan, a year-on-year decrease of 24.1% (an increase of 10.5% from the decline at the end of 2023). The year-on-year cumulative decline has expanded for 3 consecutive years and 2 months (38 months), indicating that the financial situation of real estate enterprises has not improved significantly, showing a deteriorating trend.
Among them, domestic loans were 314.4 billion yuan, down 10.3% (0.4% more than the decline at the end of 2023). The utilization of foreign capital was 500 million yuan, an increase of 7.4% (turning positive growth), which is directly related to the acceleration of foreign investment in real estate. self-raised funds were 537.4 billion yuan, down 15.2% (3.9% narrower than the decline at the end of 2023).
deposits and advance receipts were 463 billion yuan, down 34.8% (22.9% larger than the decline at the end of 2023), mainly due to the decline in the sales area of commercial housing. Personal mortgage loans were 221.4 billion yuan, down by 36.6% (27.5% more than the decline at the end of 2023), mainly due to the expansion of the decline in the sales area of commercial housing.
Financial pressure is the main reason for real estate companies to reduce investment. The main reason is that domestic loans, self-raised funds, deposits and advance receipts, and personal mortgage loans account for a large proportion of the funds in place of real estate development enterprises in the country, and the decline is large, resulting in a shortage of funds for real estate enterprises.
The main support for the capital flow of real estate enterprises is sales collection, including deposits and advance receipts, and personal mortgage loans, which have been declining for 30 consecutive months. Affected by the decline in sales, the decline in domestic bank loans, deposits and advance collections, and personal mortgage loans expanded, and these three indicators represent the ability of real estate enterprises to borrow from banks and issue bonds and cash flow.
It reflects the increased concern of financial institutions about the risks of real estate enterprises, and the very slow collection of sales funds affects the cash flow of real estate enterprises. The real estate market is in the stage of continuing to probe the bottom, adjustment and downturn, and there is risk pressure. The year-on-year decline in self-raised funds of real estate enterprises has narrowed, which is higher than that of other sources of funds, and the financing of real estate enterprises is facing greater challenges.
The eighth is the boom side. In February 2024, the national housing sentiment index was 92.13. It has fallen below 100 for 2 consecutive years and 2 months (26 months), continuing to refresh the lowest level of the national housing prosperity index since the beginning of 2016, which is rare, mainly because real estate is still in deep adjustment.
The national housing prosperity index in December 2023 was 93.36, 93.42 in November, 93.40 in October, 93.44 in September, 93.56 in August, 93.78 in July, 94.06 in June, 94.56 in May, 94.78 in April, 94.72 in March, 94.67 in February, and 94.46 in January.
The National Housing Prosperity Index is one of the indicators to judge whether the real estate market is prosperous, active, confident and prosperous. Since the national housing prosperity index broke 100 in January 2022, it has been showing a continuous decline, with a very slow trend of marginal recovery and a deteriorating trend.