Founders Secs Chief Economist: Real Estate Sales Have Peaked, Prices to Follow

Founder Securities chief macroeconomic analyst Guo Lei says the current sales wave has peaked and prices will follow, but he does not see systematic risk or a collapse in prices.

1. This round of property sales peak has emerged, beginning April sales growth will gradually decline, but the cliff-style drop national data does not appear. We judge March sales growth ( real estate sales growth of more than 35 percentage points, 30 metropolitan real estate sales growth of more than 70%) will be a top of the current cycle, and thereafter gradually decline. Refer to the previous rounds of the regulation is expected to Shanghai, Shenzhen's real estate transaction could fall in the coming months to 3-month high of 30-50%, the average monthly sales area of 30 cities will drop to 500-700,000 square meters.

2. Real estate sales price correction will occur. According to past experience, the control measures after landing, the second-hand housing transaction volume will decline more obvious, the price will be accompanied by a correction of this process. And this cycle exists in February 2016 after a jump, is not expected to stabilize, the price correction trend may be more significant. In Shanghai, for example, the outer ring average price decline rate may be around 20%, the Central will be more than 10%. Shenzhen will be slightly larger than the magnitude of price adjustment.

3. The new growth will start comparing January-February decline, but may still be greater than the next two quarters, the growth rate in the fourth quarter of last year, real estate investment growth will continue to minor repair. Due to the current regulation still is in some first-tier cities, and will not deny a small supply repair cycle bottomed out after the current round of real estate from the root; we will determine the follow-up of newly started 1-- high of February dropped to lower bits number, but still higher than last year's fourth quarter, about 14% of the growth in internet.

4. Repair of industrial added value of this round of real estate regulation will not stop, but the slope of the recovery after the third quarter may be more gentle. The current round of economic stabilization and recovery, there are three driving factors: First, this round has reached 13 months of real estate sales pulse; the second is to invest in infrastructure assets increase (from January to February this year, a total investment of new construction planned growth rate of 41% ); Third, with deflation (CRB index and PPI) and bottom up stock began manufacturing investment will be repaired. From the positive sense, the real estate regulation began early, leverage under control, follow-up leads to a serious bubble low probability of systemic risk. We judge began to rise in March industrial added value will not be reversed in the second quarter economic data will gradually rise, we remain positive inventory cycle round judge. But the rule of thumb, the industrial performance will lag the performance of the real estate department drop impact strength of slightly more than expected will lead to the recovery of real estate regulation after three quarters slope less steep.

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