China Property_ Nov NBS_ Widen Completion_REI Decline; Weak Starts; Less Price Drop (1)

Summary of the Conference Call on China's Property Market Industry Overview - The conference call focused on the China Property market, discussing recent trends and forecasts for the sector. Key Points and Arguments Sales and Market Trends - November sales showed resilience, with a 1.4% year-over-year increase compared to October's -1.4% decline, totaling RMB 827 billion in sales [5][19] - December sales are expected to continue this momentum, projected at around RMB 260 billion, representing a -7% year-over-year decline but a +7% month-over-month increase [19] - The overall forecast for FY24 indicates a -32% year-over-year decline in total sales, concluding at RMB 2.71 trillion [19] Market Dynamics - The property market is anticipated to experience a de-stocking cycle from 2025 to 2027, with sales resilient in December but potentially cooling in the first quarter of 2025 [1] - The Real Estate Investment (REI) is expected to decline by -10.4% in 2025, continuing the negative trend due to low new starts and land sales [1][5] Policy and Regulatory Environment - A proactive policy approach was noted during the December Central Economic Work Conference, emphasizing the need for stabilization in the property and stock markets [3] - Key measures discussed include: - Stabilizing property prices in major cities, which is contingent on inventory levels (new homes currently at 28 months of inventory) [3] - Demand-side policy changes to stimulate domestic demand, including potential removal of housing purchase restrictions [3] - Local execution of new policies is beginning to accelerate in cities like Hangzhou and Guangzhou [4] Construction and Completion Metrics - November saw a 39% decline in completions year-over-year, the sharpest drop of the year, while starts remained low at -26.8% year-over-year [5] - The completed but unsold residential inventory increased by 0.3% month-over-month, totaling 376.5 million square meters [5] Price Trends - The National Bureau of Statistics (NBS) reported a slight dip in property prices across all city tiers, with Tier 1 cities showing a flat performance and Tier 2 and 3 cities experiencing minor declines [5] - The overall residential price index showed a -6.0% year-over-year change, indicating ongoing price pressures in the market [5] Investment Opportunities - Despite the challenges, certain companies are highlighted as top picks for investment, including Beike, CRL, and Greentown, due to their potential resilience and market positioning [4] Macro Economic Context - Broader economic indicators such as new loans and total social financing (TSF) were disappointing, reflecting weak household and corporate demand [5] - Retail sales growth slowed to 3.0% in November, down from 4.8% in October, indicating a cooling consumer sentiment [5] Additional Important Insights - The completion and REI decline is expected to continue, with new starts and land sales at their lowest since 2005, suggesting further downside risks for the new home market [1][5] - The 15th Five-Year Plan emphasizes a balanced property market, focusing on affordable housing, rental housing, and private commodity housing [3] This summary encapsulates the critical insights from the conference call regarding the current state and future outlook of the China Property market, highlighting both challenges and potential investment opportunities.