Open source securities: Real estate sales in the fourth quarter have stabilized and the scale of new construction and completion has significantly decreased for the whole year.

Open source securities released a research report stating that since the end of September, the "stabilization after the downturn" policy, the sales data in the fourth quarter has basically stabilized year-on-year, effectively boosting market confidence. From January 1 to 15, 2025, the transaction area of commercial housing in 30 large and medium-sized cities decreased by 34% year-on-year. With the gradual release of the new policy effects, sales heat has decreased before the Spring Festival, and it is expected that January sales data will be weak. The sustainability of market recovery still needs to be observed. The main points of Open Source Securities are as follows: Sales amount remained growth in December, marginal stabilization of sales in the fourth quarter The National Bureau of Statistics released investment and sales data of commercial housing from January to December 2024. From January to December, the total sales area of commercial housing in the country was 974 million square meters, a year-on-year decrease of 12.9% (14.3% in the previous 11 months), with the sales area of commercial residential buildings decreasing by 14.1% year-on-year; the total sales amount of commercial housing from January to December was 9.68 trillion yuan, a year-on-year decrease of 17.1% (19.2% in the previous 11 months), with the sales amount of commercial residential buildings decreasing by 17.6% year-on-year. The sales area and sales amount of commercial housing in December were 113 million square meters and 1.16 trillion yuan, respectively, a year-on-year decrease of 0.3% and an increase of 2.1%; the average monthly sales price increased by 2.4% year-on-year. In terms of regions, from January to December, the year-on-year growth rates of sales area of commercial housing in the eastern, central, western, and northeastern regions were -12.7%, -12.0%, -14.6%, and -9.7% respectively, and the declines have narrowed. From October to December 2024, the year-on-year growth rates of sales area and amount were +2.8% and +1.0% respectively. The stabilization trend of sales in the fourth quarter is becoming evident. Shrinking land transaction area, both new construction and completion scale are less than 800 million square meters From January to December 2024, the new construction area of housing in the country was 739 million square meters, a year-on-year decrease of 23.0% (23.0% in the previous 11 months), with the new construction area of residential buildings decreasing by 23.0% year-on-year; the new construction area in December was 66 million square meters, a year-on-year decrease of 22.6%. According to data from China Real Estate Information Corporation, the year-on-year decrease in the land transaction area of 300 cities in 2024 was 23.3%, and the contraction of land acquisition continues to affect the housing construction data of real estate companies. From January to December, the completed area of housing was 737 million square meters, a year-on-year decrease of 27.7% (26.2% in the previous 11 months), with the completion area of residential buildings decreasing by 27.4% year-on-year; the completion area in December was 256 million square meters, a year-on-year decrease of 30.4%. The scale of real estate construction and completion in 2024 is the lowest since 2005 and 2009, with a significant shrinkage in scale. Significant improvement in sales receivables, real estate financing environment remains severe From January to December 2024, the investment in real estate development was 10.03 trillion yuan, a year-on-year decrease of 10.6% (10.4% cumulative in the previous 11 months), with the investment in residential development decreasing by 10.5% year-on-year; the investment in development in December was 0.66 trillion yuan, a year-on-year decrease of 13.3%, and the performance of sales receivables continues to suppress the investment motivation of real estate companies. From January to December 2024, the funds in place of real estate development enterprises were 10.77 trillion yuan, a year-on-year decrease of 17.0% (18.0% cumulative in the previous 11 months), including a year-on-year decrease of 6.1%, 11.6%, 23.0%, and 27.9% respectively in domestic loans, self-raised funds, deposits and advances, and individual mortgage loans (6.2%, 11.0%, 25.2%, and 30.4% cumulative in the previous 11 months). Affected by the recovery of sales in the fourth quarter, the year-on-year decreases in deposits and advances and individual mortgage loans in the fourth quarter were -0.1% and -2.6% respectively, and the funds receivables of real estate companies continued to improve. At the same time, the decline in self-raised funds of real estate companies has expanded for four consecutive months, indicating that the financing environment for real estate companies remains severe. Investment recommendations (1) High investment intensity, excellent regional layout, and market-oriented strong credit real estate companies: Poly Developments and Holdings Group (600048.SH), GREENTOWN CHINA (03900), China Merchants Shekou Industrial Zone Holdings (001979.SZ), CHINA OVERSEAS (00688), Xiamen C&D Inc. (600153.SH), YUEXIU PROPERTY (00123), Hangzhou Binjiang Real Estate Group (002244.SZ), C&D INTL GROUP (01908); (2) Both residential and commercial real estate driving, benefiting from the real estate recovery and consumption stimulation policies: Seazen Holdings (601155.SH), LONGFOR GROUP (00960); (3) The scale and penetration rate of second-hand housing transactions continue to increase, with broad prospects for the real estate after-sales service market: BEKE-W (02423), 5i5j Holding Group (000560.SZ). Risk warning: (1) Industry sales recovery is below expectations, financing improvement is below expectations, and real estate companies' funding risks further increase. (2) Policy relaxation is below expectations.