GF Securities: Real estate transaction volume continues to shrink, leading to price decreases in the Yangtze River Delta region.

GF SEC released a research report stating that the continuous contraction in volume has led to price declines. In August, the proportion of cities where new housing prices fell or remained flat month-on-month was 97%, while for second-hand homes, this proportion was 99%, both holding steady compared to the previous month. The percentage of cities experiencing price declines is still at a high level. Since the second quarter of 24, the floor price of land transactions has seen a significant decrease, with the average price of commercial and residential land transactions in 600 cities in August at 2699 yuan per square meter, a year-on-year decrease of 29.3%. In terms of economic activity, the Yangtze River Delta region has relatively good performance, with Jiangsu, Zhejiang, and Shanghai having a supply-demand ratio of 1.1, 1.1, and 1.0 respectively, much lower than the national average. Construction starts and investment scale remain at a low level, while completion performance is weakening; the decrease in financing cash flow driven by development loans has narrowed, but the amount of funds in place is still smaller than the investment needed. Policy Environment Overview: The policy environment is stable, with room for adjustments in first-tier cities. According to GF SEC's model calculations, as of September 20, 24, the cumulative intensity index of the four restrictions policy at the national level has decreased from 2304 (January 22) to 851, a cumulative decrease of 63%. The policies have not shown significant changes. In September, Beijing expressed its intention to timely cancel the non-residential housing standards, indicating that there is still room for adjustment in the four restrictions policy in first-tier cities. The government's exchange program has been widely implemented this year, with some cities expanding the scope of acquisition types, but its impact on the market is still limited. The unexpected interest rate cut of 50 basis points by the United States in September 24 may alleviate the pressure of the interest rate differential between China and the US, creating opportunities for a downward adjustment in China's mortgage rates. Transaction Market Overview: Transaction volume remains low, and prices continue to decline. According to the statistics bureau, the total sales of commercial housing in China was 639.3 billion yuan in August 24, a year-on-year decrease of 17.2%, with a slight improvement from July. The proportion of cities where new housing prices fell or remained flat month-on-month was 97%, while for second-hand homes this proportion was 99%, both holding steady. In terms of supply, in August, the monthly supply area of residential properties in 25 cities decreased by 21.0% month-on-month and 10.8% year-on-year, showing a low overall willingness to supply. In August, the average time for property turnover in 25 cities was 18.09 months, a decrease of 1.08 months from the previous month, indicating a slight improvement in market turnover amidst decreasing supplies and low sales. Land Market Overview: With decreasing volume, prices decline under pressure, with the Yangtze River Delta region leading the way in terms of economic performance. According to China Index Research Institute, the total amount of land transfer fees for commercial and residential land in 600 cities in August 24 was 186.8 billion yuan, a year-on-year decrease of 43.7%, with a wider decline compared to the previous month, indicating poor market enthusiasm. Since the second quarter of 24, the floor price of land transactions has seen a significant decrease, with the average price of commercial and residential land transactions in 600 cities in August at 2699 yuan per square meter, a year-on-year decrease of 29.3%. The economic performance in the Yangtze River Delta region has been relatively good, with Jiangsu, Zhejiang, and Shanghai having a supply-demand ratio of 1.1, 1.1, and 1.0 respectively, much lower than the national average. Development and Investment Market Overview: Construction starts and investment scale remain at a low level, while the completion performance is weakening. According to the statistics bureau, new construction of commercial housing in China was 573.2 million square meters in August, a year-on-year decrease of 17%, with a slight improvement from the previous month. The completion of commercial housing was 337.7 million square meters in August, a year-on-year decrease of 37%, with a wider decline compared to the previous month. The total investment in commercial housing development was 840.7 billion yuan in August, a year-on-year decrease of 10%, with a slight improvement from the previous month. Financing Market Overview: The narrowing of financing cash flow driven by development loans, with the amount of funds in place still smaller than the investment needed. According to the statistics bureau, real estate companies received 803.1 billion yuan in funding in August, a year-on-year decrease of 10.6%, with a slight improvement compared to July. The amount of funds received is still lower than the amount needed for investment. Financing from the supply side decreased by 3.2% year-on-year, with development loans increasing by 7.4% while self-financing decreased by 6.2%. Demand side receipts decreased by 17.2% year-on-year, with pre-sale receipts down by 15.7% and mortgage loan sizes down by 21.8%. Risk Warning: Future performance may fall short of expectations. Further tightening of the financing environment may occur.