China Property_2025 NPC preview_ Execution of existing measures

Summary of Key Points from the Conference Call on China Property Industry Overview - Industry: China Property - Date: 24 February 2025 Core Insights and Arguments 1. Policy Continuity Expected: The National People's Congress (NPC) meeting starting on 5 March 2025 is anticipated to maintain the policy stance set in September 2024, focusing on property market stabilization, housing delivery, social housing supply, inventory buybacks, and a new real estate development model [1][4][6]. 2. Local Government Reports: Multiple local governments' 2025 work reports emphasize similar themes: property market stabilization, housing delivery assurance, social housing supply increase, urban village renovation, and inventory buybacks [2][6]. 3. Project Completion Progress: As of the end of 2024, 40% of delayed projects have been completed, which is seen as a positive sign for restoring homebuyer confidence [3][4]. 4. Rental Market Pressure: Despite improvements in property sales, rental prices in tier 1-2 cities remain under pressure, indicating ongoing challenges in demand-supply dynamics [2][15][31]. 5. Destocking Timeline: The property market destocking is expected to conclude by mid-2026, with key indicators being the stabilization of rental prices and secondary listings [2][15]. Important but Overlooked Content 1. Social Housing Supply: The increase in social housing supply in tier 1-2 cities is contributing to the decline in market rentals, highlighting a shift in housing policy focus [3][4]. 2. Change in Sales Model: Some local governments are shifting from a presale model to selling completed properties, which may negatively impact developers' return on equity (ROE) in the future [3]. 3. Government Support for Developers: The Shenzhen government has provided significant financial support to China Vanke, including a Rmb2.8 billion loan and plans for an additional Rmb4.2 billion loan, indicating a proactive approach to easing liquidity pressures in the sector [12]. 4. Mixed Signals in Market Recovery: While primary and secondary inventory destocking shows improvement, the rental market's downward trend suggests that the recovery may not be uniform across all segments [15][30]. Data Highlights - Inventory Turnover: Inventory turnover months in tier 1 cities have returned to historical averages, with tier 1 cities at 15 months and tier 2 cities at 20 months [16][22]. - Secondary Listings: Secondary housing listings in 50 cities stabilized at approximately 4.1 million units, with a year-over-year improvement from 30% in February 2024 to 8.6% in February 2025 [20][25]. - Rental Listings Increase: Rental listings in tier 1 cities rose by 19% since September 2024, while rental prices continue to decline [31][39]. Conclusion The conference call highlighted the ongoing challenges and policy responses in the Chinese property market, with a focus on stabilization efforts and the impact of government measures on housing supply and demand dynamics. The mixed signals in market recovery underscore the complexity of the current environment, necessitating close monitoring of future developments.