CICC: In September, the transaction volume and prices in the second-hand housing market continued to show a weak trend, with a marginal increase in the number of listings

According to the report released by China International Capital Corporation (CICC), in September, the transaction volume index of second-hand residential properties in 80 cities based on intermediary data decreased by 10% month-on-month, while it increased by 19% year-on-year (Q3 +19%, Q2 +17%); the transaction area of second-hand houses in 15 cities based on filing data increased by 6% month-on-month and grew by 9% year-on-year (Q3 +3%, Q2 +11%). In terms of listings, the number of second-hand residential properties listed in 130 cities monitored by CICC in September increased by 0.4% month-on-month (August +0.4%), showing a continued slight growth. Looking ahead, considering that the year-on-year base for transaction volume in Q4 will rise, and the supply of second-hand houses continues to increase, the housing transaction volume and price trends in Q4 may still face certain pressures, necessitating the effective implementation of policies such as the storage of existing housing and the transformation of urban villages to continuously improve the supply-demand structure.

CICC's main viewpoints are as follows:

The transaction volume and price of second-hand houses in September continued the trend since Q2

In terms of transaction volume, the transaction volume index of second-hand residential properties in 80 cities based on intermediary data decreased by 10% month-on-month, while it increased by 19% year-on-year (Q3 +19%, Q2 +17%); the transaction area of second-hand houses in 15 cities based on filing data increased by 6% month-on-month and grew by 9% year-on-year (Q3 +3%, Q2 +11%). In terms of transaction prices, the index of transaction prices for homogeneous second-hand residential properties in September decreased by 1.7% month-on-month (average month-on-month in Q3 -1.7%, average month-on-month in Q2 -1.4%); the bargaining space for transactions increased by 25 basis points to 8.91%. Overall, the transaction volume and price of the second-hand housing market in September continued the weak trend observed since Q2.

The listing volume of second-hand houses continued to increase marginally, and sellers' price expectations remain conservative

In terms of listings, the number of second-hand residential properties listed in 130 cities monitored by CICC in September increased by 0.4% month-on-month (August +0.4%), showing a continued slight growth. In terms of listing prices, the index of homogeneous listing prices in key cities decreased by 1.5% month-on-month (average month-on-month in Q3 -1.3%, average month-on-month in Q2 -1.2%); the average adjustment range for existing properties was -5.24% (August -5.03%), which has exceeded the market average level in the second and third quarters of last year for two consecutive months, indicating that sellers' expectations continue to trend conservatively. Looking ahead, considering that the year-on-year base for transaction volume in Q4 will rise, and the supply of second-hand houses continues to increase, the housing transaction volume and price trends in Q4 may still face certain pressures, necessitating the effective implementation of policies such as the storage of existing housing and the transformation of urban villages to continuously improve the supply-demand structure.

The month-on-month decline in housing rents widened in September, and the rent-to-sale ratio continued to rise

The index of homogeneous listing rents in September decreased by 0.8% month-on-month (August -0.5%), and the rental waiting period remained basically stable at 2.12 months (August 2.11 months); affected by the decline in listing prices, the rent-to-sale ratio continued to rise by 2 basis points to 2.33%.

Investment recommendations

Focus on investment opportunities in the real estate and property management sectors. Continue to be optimistic about the risk-return profile of the real estate sector over the next 3-6 months. In addition to solid fundamentals and profit quality targets such as China Resources Land (01109), Jianfa International (01908), Binjiang Group (002244.SZ), and China Merchants Shekou (001979.SZ), consider the potential optimization of liquidity conditions, which may allow for moderate allocation to undervalued targets such as Greentown China (03900) and Seazen Holdings (601155.SH) Poly Property (00119) and others. Continue to recommend stocks with leading performance growth compared to peers or attractive dividend yields in diversified sectors, including China Resources Mixc Lifestyle (01209), Hang Lung Properties (00101), Swire Properties (01972), etc.

Risk Factors

Industry fundamentals deteriorate beyond expectations; policy implementation falls short of expectations