China's property stimulus raises optimism — but more steps are needed for a sectoral turnaround

China's property stimulus measures delivered a modest boost to the market, but they are not enough to turn around the troubled sector, according to analysts.

Home sales ticked up in some cities during China's week-long holiday, as stimulus measures boosted homebuyers' sentiment, a report by research group China Index Academy showed. 

Average daily sales in Beijing jumped 81%, in terms of floor area, compared to the same holiday period the year before. Last year's Golden Week holiday was between Sept. 29 and Oct. 6. 

Across the country, however, the average daily transaction area of new homes fell 27% during the period compared with the holiday the year before, according to the report which surveyed 25 major cities across China.

With Beijing as an outlier, other tier 1 cities Shanghai, Guangzhou and Shenzhen saw sales fall 61%, 59% and 57%, respectively. Most other cities, surveyed by the report, also saw sales shrink from a year ago to varying extents.  

Home sales during the Golden Week holiday, which is traditionally a peak period for big-ticket spendings, have been on a multi-year decline since 2021, according to the report.

The average daily sales figure stood at 107,000 square meters this year, the report showed, against 177,000 square meters in 2021, 158,000 square meters in 2022, and 145,000 square meters in 2023.

The government's recent moves could boost the market's confidence but only temporarily, said William Wu, an analyst at Daiwa Capital Markets, "without a more forceful lift, it will be unlikely to stabilize in the longer run."

"More focus should be on how sales figures change over longer periods to testify the policies' effectiveness," Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co.