JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Investment Advisors

Tightening Policies Curb Speculative Home Buyers in H2 2017

Investment Advisors, JL Warren Capital

Junheng Li

Thematic (Sector/Industry)

China Real estate / Thematic (Sector/Industry)

<p>The housing market continues its downward trend, with transactions in large cities nearly frozen in recent weeks.  The government has cracked down on both demand and supply.  New launches are on hold in big cities, even as construction is completed.  Demand has been highly suppressed.  Many home buyers are restricted from buying due to administrative measures such as the maximum number of homes that one can own, increased down payment percentage requirements and higher mortgage rates. </p><p>During the week from Dec. 4 to Dec. 10, new home GFA sales further declined 26.9% yoy in 49 key markets that we track.  For the past 49 weeks, total new home sales fell by 29.4% yoy (Exhibit 1&amp;2). Existing home GFA sales performed worse than new homes.  Total sales declined 27.8% yoy in the 17 markets that we track during the past week.  YTD, total existing home sales fell by 32.3 % yoy (Exhibit 3&amp;4).  YTD, Tier 1, Tier 2 and Tier 3 cities recorded declining volume of 39.9%, 29.7% and 8.4% yoy, respectively.</p>

The housing market continues its downward trend, with transactions in large cities nearly frozen in recent weeks.  The government has cracked down on both demand and supply.  New launches are on hold in big cities, even as construction is completed.  Demand has been highly suppressed.  Many home buyers are restricted from buying due to administrative measures such as the maximum number of homes that one can own, increased down payment percentage requirements and higher mortgage rates. During the week from Dec. 4 to Dec. 10, new home GFA sales further declined 26.9% yoy in 49 key markets that we track.  For the past 49 weeks, total new home sales fell by 29.4% yoy (Exhibit 1&amp;2). Existing home GFA sales performed worse than new homes.  Total sales declined 27.8% yoy in the 17 markets that we track during the past week.  YTD, total existing home sales fell by 32.3 % yoy (Exhibit 3&amp;4).  YTD, Tier 1, Tier 2 and Tier 3 cities recorded declining volume of 39.9%, 29.7% and 8.4% yoy, respectively.

China's Property Market Slumps Further In Midst of Liquidity Tightening