M UpdateChina Property | Asia PacificMonthly Tracker: Milder Home Price Decline in JanuaryMorgan Stanley Asia Limited+Stephen Cheung, CFAEquity Analyst Stephen.Cheung@morganstanley.com +852 3963-0385 Patrick JiangEquity Analyst Patrick.Jiang@morganstanley.com +852 3963-2567 Chloe LiuEquity Analyst Chloe.Liu1@morganstanley.com +852 2848-5497 Cara ZhuEquity Analyst Cara.Zhu@morganstanley.com +852 2848-7117 China PropertyAsia PacificIndustry ViewAttractiveHousing price softness and rising inventory continued in January, but at a milder pace m-m amid fewer secondary new listings and lower mortgage rates. Land sales increased y-y on a low base. (-) Housing prices remained weak: NBS 70-city primary housing prices were down 1.2% y-y and 0.4% m-m (vs. -0.4% m-m in December). CREIS top-10 cities primary prices were up 0.85% y-y and 0.25% m-m in January (vs. +0.18% m-m in December), and top-100 cities prices were up 0.43% y-y and 0.15% m-m (vs. +0.10% m-m in December). NBS 70-city secondary housing prices were down 4.4% y-y and 0.7% m-m (vs. -0.8% m-m in December). CREIS top-10 cities secondary prices were down 2.95% y-y and 0.53% m-m in January (vs. -0.62% m-m in December), and top-100 cities prices were down 3.96% y-y and 0.56% m-m (vs. -0.55% m-m in December). (+) Sequentially lower new secondary listings: Listing prices in 55 cities were down 6.1% y-y and up 0.8% m-m in January (vs. +0.4% m-m in December), while transaction prices were down 9.0% y-y and 0.8% m-m (vs. -0.9% m-m in December). New secondary listings were up 76% y-y and down 9.9% m-m (vs. -11.8% m-m in December). Client visits were up 115% y-y and down -7.5% m-m (vs. -6.5% m-m in December).(-) Inventory levels edging up slightly: Inventory months increased to 20.0x in January (vs. 19.8x in December) in the 70 cities we track, according to CRIC. Among these cities, inventory months were 16.7x (vs. 16.9x in December) in tier 1 cities, 19.8x (vs. 19.7x in December) in tier 2 cities, and 21.9x (vs. 21.4x in December) in tier 3 cities.(+) Slight improvement on land auctions: CREIS 300-city land sales were +57% y-y in value and +48% y-y in GFA in January due to a low base. The land auction failure rate decreased to 15.7% in January (vs. 17.4% in December), while the average land auction premium edged up to 3.7% (vs. 3.2% in December). (+) Mortgage rate lowered: The average first-home mortgage rate decreased mildly to 3.84% in January (vs. 3.86% in December), and second-home mortgage rate remained at 4.41% (vs. 4.41% in December). The average loan approval period remained low at 21 days. With the recent 25bps cut on the 5-year LPR, we expect mortgage rates to trend down further in 1Q24.(+) Incrementally more policy support: Regulators continued their financing support to developers, which includes the use of operating loans, and the project whitelist mechanism in January, whi...
