Lead
It is expected that the policy will improve in May, and the year-on-year growth rate of commercial housing sales will continue to remain low, but the decline will gradually narrow.
On the morning of May 17, the National Bureau of Statistics released macroeconomic and real estate sector data for April. At the economic level, under the intensification of the implementation of macroeconomic policies, the main indicators such as industry, exports, employment and prices have generally improved, and the national economy has continued to pick up and improve. The real estate market continued to adjust, with the cumulative decline in the amount of commercial housing sales area and real estate development investment expanding, and the decline in the area of new construction and completion improved marginally but remained low.
01
Industrial, export, and price indicators have generally improved, but domestic demand is still weak due to the decline in short-term, medium- and long-term loans to residents
In April, the national economy operated smoothly, although the growth rate of some indicators slowed down, but the main indicators of industry, exports, employment, prices and other major indicators improved on the whole, the national economy continued to pick up and improve, and positive factors accumulated.
On the whole, first, production and supply have increased steadily. In April, the added value of industrial enterprises above designated size increased by 6.7 percent year-on-year, 2.2 percentage points faster than the previous month, and increased by 0.97 percent month-on-month. Second, market demand continues to expand. In April, the growth rate of import and export of goods turned from negative to positive, with a year-on-year increase of 8%. Cumulatively, the scale of imports and exports from January to April hit a record high in the same period in history, and the total retail sales of consumer goods in April increased by 2.3% year-on-year, down from the previous month. From January to April, investment in fixed assets increased by 4.2% year-on-year, maintaining a steady growth trend. Third, prices have improved overall. In April, the CPI turned from a decline to an increase month-on-month, up 0.3% year-on-year, an increase of 0.2 percentage points over the previous month. Among them, the core CPI, which excludes food and energy, rose by 0.7%, an increase of 0.1 percentage points.
However, the sharp slowdown in financial data in April reflected the lack of domestic demand and the relative weakness of purchasing demand to a certain extent.
On the one hand, the growth rate of M1 turned negative in April, M2 continued to decline, and the activity of operation and investment was low, which confirmed the current market's concern about liquidity traps. In April, the M2-M1 scissor gap widened by 1.4pcts to 8.6% compared with March, the second highest in the past three years. On the other hand, the scale of new social financing in April showed negative growth again since October 2005, indicating that the financing support for the real economy is weakening. In addition, the continued year-on-year decline in new credit since February reflects the current lack of willingness to increase debt at the individual level, particularly in the case of home mortgages and credit card loans, where growth appears to be weaker.
02
In April, the area and amount of commercial housing decreased by 4.6pcts year-on-year, and it is expected that the policy will improve in May
From January to April, the sales area of newly built commercial buildings was 292.52 million square meters, and the sales of newly built commercial buildings were 2,806.7 billion yuan, down 20.2% and 28.3% year-on-year respectively, and the two declines were 0.8pcts and 0.7pcts respectively compared with January and March.
It can be seen that the real estate continues to be in a period of adjustment, the "golden three silver four" expectations are disappointed, and the market is in the stage of slow recovery at the bottom.
On the one hand, the shortage of supply has not been significantly alleviated, and the willingness of enterprises to launch is still at a low level. According to CRIC data, the new supply in 30 key cities in April fell by 20% month-on-month and 43% year-on-year, which is still the lowest value in the same period since 2019, and the cumulative supply in the first four months fell by 37%; On the other hand, the performance of second-hand houses is more resilient than that of new houses, diverting some customers who just need or even change their first needs. According to CRIC data, the transaction area of second-hand houses in key cities in April increased by 12% month-on-month and fell by 9% year-on-year, narrowing the decline. The cumulative transaction area in the first four months is expected to be 25.31 million square meters, a year-on-year decrease of 18%.
In addition, the overall downward trend of month-on-month growth has not changed since April last year. In April, the sales area of newly built commercial buildings was 65.84 million square meters, and the sales of newly built commercial buildings were 671.2 billion yuan, down 42% and 38% respectively from the previous month, of which the sales area of commercial buildings in April was a new low in the same period since 2015. The year-on-year decline in a single month expanded again, with the area and amount falling by 22.8% and 30.4% year-on-year in April, both of which were 4.6 pcts narrower than the decline in March.
It is worth noting that since the end of April, the policy has been intensively introduced, including the further relaxation of purchase restrictions in core cities to play a positive role in the restoration of market confidence, and the volume and transaction volume of new real estate with better quality in some core cities have rebounded greatly, reflecting the important role of policies to stabilize the market.
03
The sales prices of first-hand and second-hand commercial residences expanded year-on-year, and the decline in second-hand housing prices far exceeded that of first-hand houses
In April 2024, the real estate market continued to adjust, and among the 70 large and medium-sized cities, the month-on-month and year-on-year decline in the sales prices of commercial housing in all tiers of cities expanded.
On a month-on-month basis, in April, the sales price of newly built commercial residential buildings in 70 cities fell by 0.6%. Among them, first-tier cities fell by 0.6%, an increase of 0.5 percentage points from the previous month, and only Shanghai rose by 0.3%. The sales prices of newly built commercial residential buildings in second- and third-tier cities fell by 0.5% and 0.6% respectively, both of which increased by 0.2 percentage points from the previous month.
In April, the sales price of newly built commercial residential buildings in 70 cities fell by 0.9%, the first-tier cities decreased by 1.1%, the decline rate increased by 0.4 percentage points over the previous month, and the sales prices of second-hand residential buildings in the second- and third-tier cities decreased by 0.9% month-on-month, and the decline rate increased by 0.4 percentage points from the previous month
On a year-on-year basis, in April, 63 of the 70 cities saw an overall decline in the price of newly built commercial housing, with an overall decline of 3%. Among them, prices in first-tier cities fell by 2.5% year-on-year, an increase of 1.0 percentage points from the previous month, and only Shanghai rose by 4.2% year-on-year. The sales prices of newly built commercial residential buildings in second- and third-tier cities decreased by 2.9% and 4.2% year-on-year respectively, an increase of 0.9 and 0.8 percentage points respectively from the previous month.
In April, the prices of second-hand commercial housing in 70 cities fell by 6.8% overall, with prices falling in all cities. First-tier cities decreased by 8.5%, an increase of 1.2 percentage points from the previous month, and second- and third-tier cities decreased by 6.8% and 6.6% respectively, both of which increased by 0.9 percentage points from the previous month.
It is worth noting that both month-on-month and year-on-year, the decline in second-hand housing prices is higher than that of new homes, and the number of cities that have fallen is much greater than that of new homes. The price of second-hand housing continues to fall, which will undoubtedly further squeeze the scale of new housing and divert customers who just need new housing.
04
The year-on-year decline in new starts and completions narrowed, with new starts falling 14% and completions falling 19.1% in April
From January to April, the construction area of real estate development enterprises was 687544 million square meters, a year-on-year decrease of 10.8%. The area of new housing construction was 235.1 million square meters, down by 24.6%. Among them, the area of new residential construction was 170.06 million square meters, a decrease of 25.6%. The area of housing completions was 188.6 million square meters, down by 20.4%. Among them, the area of residential completions was 137.46 million square meters, down by 21.0%.
Since the beginning of this year, the pattern of new construction and completion of both weak has not been substantially reversed, and the decline has always remained at a low level, but there is a trend of gradual stabilization.
The cumulative decline in the area of new construction has narrowed for two consecutive months, and the decline from January to April continued to narrow by 3.2 pcts compared with that from January to March, with a decline of -24.6% similar to that in the second half of last year and 4.2 pcts higher than the decline in the whole year of 2023. The area of new construction started in April was 62.27 million square meters, down 20.7% month-on-month, and the year-on-year decline was significantly narrowed by 11.4 pcts to 14% compared with March, and the year-on-year decline in a single month was only higher than that in January-February, November and December 2023. However, in absolute terms, the willingness of enterprises to start new construction has been greatly affected by the weakening market, and the number of new starts in April is the lowest in a single month since 2014, down 22% from the average monthly new construction in 2023.
Affected by last year's high base, the growth rate of completed area will fall into negative territory in 2024, but there are signs of marginal stabilization in both monthly and cumulative growth rates. From January to April, the decline in the area of completions narrowed slightly by 0.3 pcts from January to March to -20.4%. Among them, the new construction area in April was 36.01 million square meters, down 26% month-on-month and 19.1% year-on-year, narrowing by 2.7 pcts from the decline in March. The absolute number of completions in a single month is consistent with the trend of new construction starts, which is at a new low since 2012. Considering that the delivery of buildings is still an important part of resolving the current market risks, with the implementation of supporting policies in the future, the growth rate of completed area is expected to stabilize.
05
The decline in development investment dragged down the decline in new construction starts and land investment continued to expand, falling by 10.5% year-on-year and 14% month-on-month in April
From January to April, the national real estate development investment was 3,092.8 billion yuan, a year-on-year decrease of 9.8%, an increase of 0.3 pcts compared with that from January to April, and the cumulative growth rate was a new low since March 2020. The investment in residential development was 2,339.2 billion yuan, down 10.5 percent, the same as that from January to March.
On the one hand, the growth rate of new construction starts is still at a low level, which has a limited impact on development investment, and on the other hand, the weakening of the land market and even the cooling of land auctions in core cities have also dragged down development investment. According to CRIC statistics, from January to April 2024, the transaction value of operating land in 300 cities across the country decreased by 16% year-on-year, and the first-tier cities that are the focus of real estate enterprises fell by 29%. Among them, the transaction value of operating land in 300 cities in April fell by 40% year-on-year, and cities of all energy levels fell significantly year-on-year.
In a single month, the national real estate development investment in April was 884.6 billion yuan, down 14% month-on-month, and the absolute volume decreased by 3.2% compared with the average monthly volume in 2023. In the same period, the national development investment in April fell by 10.5% year-on-year, an increase of 0.4 pcts from March.
To sum up, we give the following judgment on the market outlook:
Predicting May, we believe that under the gradual lifting of purchase restrictions, "trade-in", the decline in the down payment ratio, the cancellation of the lower limit of the loan interest rate and other multiple policies, home buying confidence and expectations are gradually recovering, with the new launch in the month "quality and contraction", the overall transaction or will be slightly larger, and the absolute volume is expected to be the same as this month or a slight increase of less than 10%.
However, based on last year's high base, the year-on-year decline will continue. From the perspective of energy levels, it is a high probability event that the overall popularity of the first line is better than that of the second and third lines, and the situation of "the strong will always be strong" is expected to continue: in the core first- and second-tier cities such as Shanghai, Beijing, Xi'an, and Hangzhou, the market heat is in the front, and the removal rate may increase month-on-month due to the stimulation of the new policy; In Shenzhen, Suzhou, Wuhan, Nanjing, etc., the market heat is expected to recover at a low level due to the continuous optimization of supply volume or supply structure; Cities dominated by rigid demand, such as Tianjin, Qingdao, Zhengzhou, Chongqing, etc., although the overall launch is still dominated by rigid demand products, due to the impact of low-price diversion of second-hand housing, the de-conversion rate may hover at a low level.
In the context of picking up the leakage of "low-cost housing", the transaction of second-hand housing in May may be the same as that in April or a slight increase, and the degree of recovery is expected to be better than that of new housing, of which the proportion of second-hand housing transactions in Beijing, Shanghai and Nanjing Luxia has exceeded 7 percent, and the share of second-hand housing will continue to grow.
On the whole, the year-on-year growth rate of commercial housing sales area, amount and cumulative continued to remain low, but the decline rate gradually narrowed. Driven by the policy of "guaranteed delivery", the area of completions in the second quarter of 2024 is still supported, but the overall trend is still downward. In the context of destocking, the contraction of land supply and demand will affect the growth rate of real estate development investment, and it is expected to continue the bottoming shock trend for 3-6 months. (Source: CRC Research Center)