The A-share real estate sector is at a trough, and it's a good time to invest-clevelanddrifters.com

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The A-share real estate sector is at a trough, and it's a good time to invest

time：2023-03-24 01:28:10 source：clevelanddrifters.com author：Market analysis

The A-share real estate sector is at a trough, and it's a good time to invest

The real estate industry has been in the doldrums for a long time, and the real estate industry has been in a downturn since August. Both the sales area and the sales amount showed a year-on-year decline. Since the beginning of this year, the area of land purchased across the country has been in a process of sharp decline, with a drop of more than 40%. In the first half of the year, the construction area still declined, and there was no obvious recovery in financing. Under such circumstances, real estate policies in many parts of the country began to relax in September. Policies in various places are mainly based on measures to ensure delivery, which has restored consumers' confidence in buying houses. Nonetheless, the pressure on national property sales remained high in September. At present, the leading companies with the ability to acquire land are the leading companies in the industry, mainly central enterprises and state-owned enterprises. The competition for land acquisition has become significantly smaller, and leading companies can win the auction at relatively low prices. This is of course beneficial to the future development of leading companies in the industry. However, the leading companies also live within their means and maintain a reasonable flow of funds. Faced with the situation of the real estate market, I think that although my country's real estate industry is in a downturn, most of its risks may have been released. It may bottom out in the next few years, showing a trend of extreme prosperity. The current positive signal for the real estate industry is that the decline in the area and sales value of houses sold in the first half of the year has begun to show a decelerating trend. In some cities, measures such as housing subsidy, lower down payment, and guaranteed delivery have been introduced, which have effectively stabilized the current real estate development. The development space of my country's real estate market is still huge. my country is still in a period of rapid urbanization development, and there is still a large space for the corresponding housing demand. People's need for housing has been upgraded to "a better house, a more beautiful environment". Recently, Yu Liang, chairman of A-share Vanke, had a good saying at a media exchange meeting. He said: "There is no market that goes up unilaterally, and there is no market that goes down forever and sees no bottom. It is common sense that neither a one-sided downturn nor a one-sided upswing is sustainable." Both the real estate market and the stock market are It's common sense - there are no permanent ups and downs. The cycle is the nature of the market. The ancient philosophy of our country has always had such a view, such as the "Book of Changes" said "no extreme Tailai", "Tao Te Ching" said "reverse the movement of the Tao, the weak use the Tao". The development of things is a reciprocating process of yin and yang. Every industry has its cyclical booms and busts. Now all the signs in the real estate industry have shown that the real estate industry has clearly entered a trough. Many real estate developers have experienced serious problems with asset turnover, some real estate has had delivery problems, the sales prices of real estate in third- and fourth-tier cities have continued to decline, and real estate lending has tightened. Many real estate developers have been afraid to acquire land, and the construction of a real estate project takes several years or even ten years. This will inevitably lead to a lack of new houses on the market in a few years, when house prices are likely to rise. At present, real estate stocks in the A-share market have begun to rebound, and the real estate sector is showing signs of bottoming out. While the downturn in the real estate industry may continue for some time, we do not have the ability to know when this downturn will end. Therefore, we do not have the ability to find the best investment timing and investment location. We can only make strategic investments when we see that the current real estate industry is in a downturn. If our current investments are quilted, we continue to cover positions. It is already the best decision to invest in leading companies in the real estate sector or themed funds in the real estate industry in batches. Value investing is essentially counter-cyclical investing. Why countercyclical investing? Because only in the trough of the industry cycle, we investors can buy cheap asset prices. In some areas of our city, a house of 60 square meters is only sold for 50,000 yuan! This is definitely the price of cabbage. The downturn in the real estate industry can give us the opportunity to capture real estate industry assets, including stocks and funds, at low cost. Investing in this period has the least risk and the greatest profit potential in the future.

(Responsible editor：Individual stock analysis)

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