China Galaxy Securities: The year-on-year decline in real estate sales across the country narrowed in September, and the effects of the policy may be gradually showing

The Zhitong Finance App learned that China Galaxy Securities released a research report saying that under the influence of a low base, the year-on-year decline in the country's real estate sales area and sales amount from January to September 2024 was narrower than the previous month, and the monthly sales area in September increased compared to August. There was a slight restoration on the investment side. Since late September, various departments have introduced a number of policies for real estate, with separate support policies on the demand side, supply side, and land market. The bank believes that with strong policy support and last year's low base, the effects of the policy may gradually show: leading housing enterprises showing excellent operation and management capabilities have financial advantages, and their market share is expected to rise further. The bank is optimistic about: China Merchants Shekou (001979.SZ), Poly Development (600048.SH), Vanke A (000002.SZ), Xincheng Holdings (601155.SH); Recommended Focus: 1) Quality Development: Greentown China (03900), China Resources Land (01109): 2) Quality Property Management: China Resources Vientiane Life: 3) Quality Commerce: Hang Lung Real Estate (00101): 4) Lead Agent: Greentown Management Holdings (09979): 5) Intermediary Leaders: Shell (00-W) 2423), I love my family (000560. SZ).

The main views of China Galaxy Securities are as follows:

Sales: The year-on-year decline in cumulative sales narrowed. From January to September 2024, the sales area of commercial housing nationwide was 702.84 million square meters, down 17.10% from the previous month, and the decline was 0.9 pct narrower than the previous month; in September 2024, the sales area of commercial housing in a single month was 96.821 million square meters, down 10.98% year on year, up 50.04% month on month. From January to September 2024, the country's commercial housing sales were 6888 billion yuan, down 22.70% year on year, and the decline was 0.9 pct narrower than the previous month; in September 2024, commercial housing sales were 915.653 billion yuan, down 16.27% year on year, up 43.23% month on month. The corresponding average sales price for January-September was 9,800 yuan/square meter, down 6.76% year on year and 0.56% month on month; average monthly sales price was 9,457 yuan/square meter, down 5.93% year on year and 4.54% month on month. There was a slight restoration in September compared to July and August. On September 24, the central bank proposed a package of policies. At the end of September, first-tier cities successively issued policies for the property market. Among them, Guangzhou took the lead in liberalizing purchase restrictions, and the threshold for buying a home was lowered to varying degrees in North Shenzhen. The bank believes that the policies introduced centrally in September may have a positive effect on the performance of the property market in October, and that the effects of the policies may gradually become apparent.

Investment: The investment started with minor repairs. Real estate development investment from January to September 2024 was 7868 billion yuan, a year-on-year decrease of 10.10%. The decline was slightly narrower than the previous month by 0.1 pct. The monthly development investment in September was 939.645 billion yuan, down 9.36% from month to month, up 0.69% from month to month. As the policy progressed, housing companies' willingness to invest increased slightly from month to month. Construction side: From January to September 2024, the new construction area was 56.51 million square meters, a year-on-year decrease of 22.20%. The benefit reduction was 0.3 pct less than the previous month. In September, the new construction area was 658.611 million square meters, a year-on-year decrease of 19.87% and an increase of 0.38% month-on-month. Housing enterprises acquired relatively small amounts of land in the early stages. Against the backdrop of a slight improvement in the property market in September, there was a slight increase in construction commencement. Construction side: The completed construction area from January to September 2024 was 368.16 million square meters, a year-on-year decrease of 24.40%, and an increase of 0.8 pct over the previous month. In September, 34.244 million square meters of construction were completed in a single month, a year-on-year decrease of 31.41% and a month-on-month increase of 1.34%. Construction completion was relatively high last year, so due to the base figure, the year-on-year decline in completion increased. Considering the good overall performance of completion in 2023, completion performance may continue to be under pressure in 2024.

Funding: Funding available narrowed slightly year over year. From January to September 2024, housing enterprises received capital of 788.9.8 billion yuan, a year-on-year decrease of 20.20%. The decline was 0.20 pct narrower than the previous month. Among them, domestic loans from January to September were 11466.6 billion yuan, down 6.20% year on year; self-financing was 2868 billion yuan, down 9.10% year on year, deposit and advance payments were 2359.3 billion yuan, down 29.80% year on year, and personal mortgage loans were 1107.9 billion yuan, down 34.90% year on year. In September alone, among the sources of real estate development capital, domestic loans fell 14.40% year on month; deposits and advance payments related to sales fell 26.26% year on month, and the decline was greater than the previous month. As the overall sales market continues to be sluggish, the year-on-year decline in deposits and advance payments may be under pressure. With the introduction of policies on the financing side and the enterprise side in late September, the bank believes that the pressure on the corporate financing side may ease.

Risk warning: Risk of policy promotion falling short of expectations; risk of falling short of expectations due to urban policies; risk of macroeconomics falling short of expectations; risk of funding falling short of expectations; risk of large fluctuations in housing prices.