Real estate industry: May sales "price rises" over market expectations


On June 14, 2011, the National Bureau of Statistics announced the national real estate market performance index for the period from January to May 2011.


In May, the financial expenditure for housing guarantees continued to increase, which was a huge increase of 80%. The investment in real estate development in May was 539.7 billion yuan, up 20.09% month-on-month, of which residential investment was 379.3 billion yuan, up 16.92% from the previous quarter. We believe that real estate investment in May was better than April, which is not the result of the change in the “development strategy of dynamic response to the tightening of the capital chain”. The survey of real estate investment historical data more reflects a seasonal factor. Of course, the protection of housing is worth considering. In May, the financial expenditure on affordable housing was about 30.1 billion yuan, a substantial increase of 81.33% compared with 16.6 billion in April, which shows that the construction of affordable housing is gradually advancing under the guidance of the government, if it is guaranteed in the construction funds. Against the background, we expect that the investment in affordable housing in the second half of the year will make up for the decline in the growth of ordinary commercial housing investment.

In May sales, “price rises”, the performance is better than the market's consensus expectations. In May, the country’s commercial housing sales area was 80.34 million square meters, up 18.54% year-on-year and up 10.74% month-on-month. The performance was better than the relatively pessimistic consensus of the market in early May, that is, the commercial housing sales in May will continue to decline in April. We believe that the “volume increase” of commercial housing sales in May was mainly due to the basic support of "rigid" demand on the one hand; and on the other hand, some high-end real estate projects were staged hot in the backdrop of high inflation. In the context of the fine-tuning of the sales structure of commercial housing, the average price of commercial housing in May increased by a remarkable 40.18% month-on-month to RMB 5,653/sq.m., forming a “price increase” in the sales of commercial housing in May. Overall, in May, the sales volume of "commodity prices rise" in commercial housing basically conforms to our goal of "balancing the balance between building a house and ensuring local housing prices in the "Spring River Plumbing Duck Prophet," "smart money" in the bottom of bargaining _ real estate industry event report. The expectations of the “stable and rising prices” of housing prices are becoming clearer in May and June, and the trading volume of commercial housing is expected to steadily rise.

The developer's capital chain continued to be under pressure in May, but it has improved from the previous quarter. The total real estate development funds in May amounted to RMB 697.8 billion, a year-on-year increase of 22.72% and a year-on-year increase of 14.51%. The developer's capital chain improved in the “comparable price” of commercial housing sales. From the perspective of sub-fund sources, domestic loans, self-raised funds, deposits, advances, and personal mortgage loans rose by 4.15%, 27.12%, 11.45%, and 1.92% respectively. However, from the static indicator “the ratio of total investment funds for real estate development to the amount of investment in real estate development,” it fell from 1.4 in April to 1.3 per month, indicating that the developer’s capital chain continued to be under pressure in May. In view of the trend of "commodity price and price rise" of commercial housing sales in May, we believe that in June developers will increase the amount of push-pulls, and in combination with the existing "control and development rhythm" measures, the capital chain will not be significantly worsened.

Maintain the industry "buy" rating. On June 14th, the central bank raised the reserve requirement ratio by 0.5% again. In the context of the year-on-year growth of the industrial added value in May, the “bottom” of monetary policy may be approaching quietly; if the monthly interest rate hike fails, it means Steady monetary policy is "steady."

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