The latest analysis of China's property market reveals a persistent downturn in key metrics such as prices, units, and Gross Transaction Value (GTV) for both existing and new home sales. This trend, observed in the first quarter of 2024 (1Q24), continued into April 2024, signaling ongoing weakness in the sector. Factors contributing to this decline include the absence of the wealth effect among Chinese consumers and the delayed impact of domestic stimulus measures.
In this challenging landscape, BEKE's revenue is projected to decline by 17.4% year-on-year (Y/Y) to RMB 16.8 billion in the fourth quarter of 2023 (4Q23), surpassing consensus estimates of RMB 16.2 billion. However, the revenue consensus for the second quarter of 2024 (2Q24) appears overly optimistic, with a projected 7.7% Y/Y growth, despite the lack of growth observed in April 2024 GTV.
A closer look at the data highlights the performance of existing and new home sales. Existing home sales witnessed a downturn in 1Q24 but showed signs of stability in April 2024. While both existing home listings and rental listings exhibited limited growth, the existing home price index across different city tiers experienced declines from the end of 4Q23 to March 2024. BEKE's existing home sales are expected to decline significantly in 1Q24 but show marginal growth in April 2024, with GTV following a similar trend.
Similarly, new home sales faced challenges, with declines observed in prices, units, and GTV in both 1Q24 and April 2024. The new home price index across tiered cities registered decreases from the end of 4Q23 to March 2024. BEKE's new home sales are anticipated to decline substantially in 1Q24, with further declines expected in April 2024, reflecting the broader market downturn.
Overall, the data underscores the difficult operating environment for BEKE in China's property market, with continued declines across various sales metrics. The outlook remains uncertain, with cautious optimism warranted in assessing BEKE's future performance amidst ongoing market challenges.
