Dahua Jixian: Maintaining China's real estate 'increase' rating, domestic housing stocks and overseas development (00688) are favored

The Zhitong Finance App learned that under geopolitical factors, Dahua Jixian said that under geopolitical factors, the government will prioritize stabilizing the property market, and support policies of the central bank and the Ministry of Finance have already been implemented and fermented. It is expected that during the March 2 meetings, it is expected that fiscal easing measures will be further promoted to boost the market and maintain the “increase in holdings” rating of Chinese real estate. The first choice for domestic housing is Chinese and overseas development (00688). In the short term, the bank expects property sales in January this year to decline due to the Lunar New Year.

As for the Hong Kong real estate market, Dahua Jixian said that Hong Kong developers' low price strategy worked. Hong Kong buildings reached a 3-year high in 2024, and rental returns on second-hand properties have also rebounded. However, concerns about geopolitical risks, high market interest rates, and uncertain prospects for interest rate cuts will hinder the recovery of the property market and maintain the “in sync with the market” rating of Hong Kong real estate stocks. The industry's first choice is still SHINLAND (00016).

Dahuaji indicated that in 2024, first-hand transactions in the Hong Kong property market rebounded 58% to 16,861 units, and the turnover increased 58.9% to 208.2 billion yuan. Second-hand transactions increased by 13.8% to 33,794, but the amount fell slightly by 3.5% to $242.3 billion, indicating that buyers were willing to enter the market, but Hong Kong property prices continued to fall.

Dahua continued that the Central Plains City Leading Index (CCL), which reflects second-hand property prices, fell more than 6% throughout the year, hitting a low of nearly 8 years, while the Central Plains Valuation Index (CVI), which measures property price valuations by major banks, recently fell to 48.78 points, reflecting banks' conservative property valuations.

In terms of return, Dahua Jixian statistics show that as of October last year, the return on Hong Kong Tower properties had risen to 3.46%, which is close to 3.5% mortgage interest rate and 6-month fixed deposit interest rate, and far exceeds the level of first-tier cities in mainland China.