China Property_ Property Market Remained Lukewarm in September

Summary of the Conference Call on China Property Market Industry Overview - Industry: China Property - Date: October 18, 2024 - Context: The property market in China remains lukewarm, with ongoing challenges in sales and construction activities Key Points Property Sales Performance - Property sales in September showed a slight decline, with national sales volume dropping by 11.0% year-on-year (y-y) and sales value decreasing by 16.3% y-y. This is an improvement compared to August's declines of 12.6% and 17.2% respectively [1] - The cumulative decline for the first nine months of 2024 (9M24) stands at 17.1% for volume and 22.7% for value y-y [1] Home Prices - The NBS 70-city home prices continued to decline, with primary sales down 0.7% month-on-month (m-m) and secondary sales down 0.9% m-m in September, consistent with August's performance [1] Construction Activity - Construction activities remain weak, with completions falling 31.4% y-y in September, slightly better than August's 36.6% decline. The 9M24 decline in completions is now 24.4% y-y [2] - New construction starts decreased by 19.9% y-y, with a cumulative decline of 22.2% y-y for 9M24 [2] - Real estate investment (REI) declined by 9.4% y-y in September, with a 10.1% y-y decline for 9M24 [2] Market Outlook - The Politburo's recent tone change regarding the housing market has improved sentiment slightly, with expectations for better sales in Q4 due to seasonal factors and policy support [3] - Strong home sales were observed during the Golden Week and into October, indicating potential for notable quarter-on-quarter improvement in Q4 [3] - However, the sustainability of this sales improvement into 2025 remains uncertain due to unclear funding and timelines for inventory buyback and urban redevelopment [3] Investment Recommendations - The report suggests maintaining a focus on defensive state-owned enterprises (SOEs) as a strategy amidst the current market conditions [1] Additional Data - Total sales value for 9M24 was Rmb 6,888 billion, down 22.7% y-y, with residential sales value at Rmb 6,024 billion, down 24.0% y-y [3] - Total gross floor area (GFA) sold was 703 million sqm, down 17.1% y-y, with residential GFA sold at 588 million sqm, down 19.2% y-y [3] Important but Overlooked Content - The prolonged sluggish land sales, with CREIS 300-city land sales volume falling 25.4% y-y in 9M24, indicate ongoing challenges for developers [2] - The report emphasizes the need for concerted policy implementation and macroeconomic recovery to support a turnaround in resident sentiment and sustainable improvement in sales and housing prices [3]