China Property:Eight-day Golden Week leads to sales decline;rebound seen post-holiday

Non-comparable weekly data with Mid-Autumn collides with National
Day。

金沙娱樂城下载,Improvement in Shenyang market with resilient sales and decent ASP
growth

    Holiday sales data has resulted in share price retreat despite
expected salesdecline, which we attribute to: 1) 8holidays (incl
Mid-Autumn Festival) in Oct2017vs. 7in 2013-16(Fig.1); 2) full-week
holiday falling in reporting week vs.4-6days in 2013-16; 3) high base in
2016but weak sales YTD in T1/2cities; 4)pre-holiday govt restriction on
pre-sale permits resulting in much fewer newlaunches; and 5) online
registration delay amid price cap. Though we expect arelatively weak
Q4physical market on high base and policy tightening, we sawa
post-holiday recovery in daily transactions, and expect major developers
tocontinue to outperform if more permits are granted in late
October.。

    We recently visited seven residential projects in Shenyang by the
majordevelopers that we cover (Vanke, CR Land, Sunac, Longfor,
Sino-Ocean, CIFI).As one of the major cities in North-Eastern China that
had high inventorybefore, Shenyang has shown good improvement this year
with resilientproperty sales (9M17sales volume +9% yoy) and decent ASP
growth (+10.4%YTD). Inventory has dropped to 15months (vs. 30months in
2014), but is stillhigher than other T2cities. Locals expect further ASP
growth due to limitedland supply.

    Weekly sales during golden week decline but should recover
post-holiday。

    Resilient property sales despite policy headwinds

    Soufun data showed that weekly sales (2-8October) for the 25cities
trackedfell by 64%/67% W-W/Y-Y to 1.5m sqm. Four-week sales were also
down by2% from the previous four weeks, and down by 35% Y-Y (vs. YTD
sales volumedecline of 23% Y-Y). While the sales decline during the long
holidays isexpected, the magnitude is big due to the reasons we listed
above. However,according to WIND data, post-holiday sales (11cities)
have come back to thepre-holiday level; therefore, we believe that
overall sales should recover overthe next few weeks (please refer to our
analysis in Fig.3).。

    In addition to the HPR, Shenyang introduced the restricted re-sale
policy (fiveyears in core districts for primary sales) on 7August.
However, property saleshave remained resilient (9M17sales volume +9%
yoy, Fig. 1) with stablevisitations, although the sale-through rates
have declined to 55-60% (vs. >65%before). Local demand remained
strong with >80% buyers local upgraders andnew citizens (low
requirements for university graduates to get ShenyangHukou), and minimal
speculators (difficult for non-local buyers to acquire acommercial
mortgage). Sales managers are optimistic on 4Q property salesand several
projects we visited are planning for new launches in the next
twomonths.

    Major developers’ sales remained decent at 19% Y-Y growth in
September。

    ASP remains stable amid lower inventory, decent credit and higher
land prices

    The sales performance of major developers remained decent in
September.According to the latest data announced by the 25major
developers, Y-Y salesin September were up 19% (YTD of 46%) even at a
high base, with many ofthem maintaining strong momentum in September.
This reinforces industryconsolidation (Fig.4).。

    Although the prevailing mortgage rate has increased to a 5-10%
premium onthe base rate (vs. a 15% discount last year and at par in
1H17), credit remainsdecent, with the down-payment ratio staying at 30%
and the mortgageapproval period only lengthening slightly to about one
month. Also, propertyprices in Shenyang showed decent growth (+10.4%
YTD, Fig. 2) due to: 1)lower inventory (15months in August vs. peak of
30months in 2014, Fig. 3);

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