Caixin's Financial News, September 2nd (Reporter: Li Jie) In August, the sales of the top 100 real estate enterprises were at a low level, and many real estate enterprises' mid-year performance is still declining or even losing money. The industry fundamentals and the performance of real estate enterprises are still in the process of reaching the bottom.

According to the statistics of China Index Research Institute, from January to August 2024, the total sales of the top 100 real estate enterprises amounted to 2683.24 billion yuan, a decrease of 38.5% year-on-year, narrowing by 1.6 percentage points compared to the previous month. In August, the sales of the top 100 real estate enterprises decreased by 22.1% year-on-year, and decreased by 2.43% month-on-month.

"Due to the weakened effect of the real estate support policies and the impact of high temperatures, the sales area of new houses in key cities continued to decline in August, with a year-on-year decrease of about 20%, an expanded decrease. The market still faces significant adjustment pressure," said an analyst at China Index Research Institute.

For the future market, analysts at CRIC predict that with the arrival of the traditional peak sales season, the intensity and marketing efforts of real estate companies will increase. Overall transactions in September may increase month-on-month, but considering the current sluggish market conditions, the increase will be very limited without obvious policy stimuli.

Specifically, there were 6 real estate companies with sales exceeding a billion yuan from January to August, which is a decrease of 6 companies compared to the same period last year; there were 61 real estate companies with sales exceeding a hundred billion yuan, a decrease of 29 companies compared to the same period last year.

Among them, Poly Developments and Holdings Group ranked first in the industry with sales of 220.8 billion yuan in the first 8 months of this year, followed closely by China Overseas Land & Investment Limited with 180 billion yuan, Greenland Holdings with 165.6 billion yuan in third place, Vanke with sales of 163.7 billion yuan in fourth place, and China Resources Land with 155.4 billion yuan in fifth place.

The sixth to tenth places in the industry are held by China Merchants Shekou Industrial Zone Holdings, China Vanke, Hangzhou Binjiang Real Estate Group, Yuexiu Property, and Longfor Group, with sales of 130.9 billion yuan, 77.7 billion yuan, 72.3 billion yuan, 70.5 billion yuan, and 65.1 billion yuan, respectively.

It is worth noting that as more than 100 A+H-listed real estate companies have successively released their mid-term performance reports for 2024, the profitability of many listed real estate companies has continued to weaken, and net profits have decreased significantly.

According to the monitoring of the China Real Estate Information Corporation, among the 105 A+H-listed real estate companies in the first half of 2024, 72 companies saw a year-on-year decline in revenue, 87 companies had a year-on-year decline in net profit, and 50 companies experienced losses, of which 24 companies recorded their first loss since the epidemic.

In response, the aforementioned analysts at China Real Estate Information Corporation stated that due to weak market demand, further decline in housing prices, and intensified market competition, real estate companies are encountering obstacles in sales and destocking. "Price for volume" has become a common means to reduce inventory, leading to insufficient growth momentum in revenue scale and pressure on profit levels. At the same time, real estate companies continue to make provisions for impairment of investment properties and inventories, which also erodes the industry's profit levels to a certain extent.

Many analysts believe that with the traditional strong sales season of the real estate market approaching in September and October, expectations for the introduction of a new round of loose policies are gradually strengthening.

"The new round of policy enhancements may be imminent." Analysts at Sinolink Securities pointed out that recently, high-level cities have introduced policies successively, and market expectations for policy enhancements and credit easing have increased.

On the land side, Shanghai officially withdrew the "70/90" policy in August, accelerating the construction of a new model for real estate development with a dual-track system of indemnificatory apartments and commodity housing. On the financial side, the five-year and above Loan Prime Rate (LPR) is expected to be lowered again within the year, driving down the interest rates for newly added housing loans. On the demand side, Chongqing adjusted the restriction on home sales and determined the first-home status by district, while Guangzhou, Kunming, Tangshan, and other places optimized the housing provident fund policies and introduced measures to support the use of the housing provident fund for down payments, reduce the minimum down payment ratio for housing provident fund loans, and increase the maximum amount of housing provident fund loans.

"The key timing of the traditional strong sales season, September and October, is approaching, and there is still room for policy relaxation in first-tier cities. Policies may be introduced in a timely manner to boost market confidence," said analysts at Sinolink Securities.

Analysts at the China Real Estate Information Corporation believe that with the traditional strong sales season of September and October approaching, the activity level in the new housing market in core cities may experience a slight rebound in the short term. However, the previous significant reduction in land supply may constrain the supply capacity of real estate companies, thereby dragging down sales recovery. At the same time, long-term factors such as expectations for household income improvement have not shown clear improvement yet, so the overall new housing market is still under pressure. Under the situation of "price for volume", it is expected that the second-hand housing market in core cities will maintain a certain level of activity.

"Different cities still show significant differentiation in the market", said the aforementioned Ke Rui analyst. Beijing, Shanghai, Chengdu, Xi'an, Hangzhou and other short-term markets are still running smoothly. The turnover rate may fluctuate due to supply structure, but the market resilience is relatively strong, and the heat is also leading the way in first- and second-tier cities. Secondly, cities such as Tianjin, Wuhan, and Nanjing may continue to show a weak recovery trend in new home transactions. As for most weak third- and fourth-tier cities, transactions may remain stable in August or increase slightly, making it difficult to see a significant improvement."

Editor / jayden