Investors Unimpressed by Housing Ministry's Measures, but Path to Long-Run Recovery Intact

China’s Ministry of Housing and Urban-Rural Development, along with the Ministry of Finance and other authorities, announced new measures on Oct. 17 to stabilize the property market. We think the most significant directive pertains to upsized credit support to stalled projects, as overall funding will increase to over CNY 4 trillion by the end of 2024 (CNY 2.2 trillion loans approved as of Oct. 17). We expect an acceleration in loan disbursement with distressed developers receiving more funds, which should prop up homebuyers’ confidence, in our view. However, the market may be disappointed by the lack of new incremental stimulus, except reiteration of local governments’ autonomy to relax buying curbs. Despite 5%-17% share price declines in property names following the conference, our longer-term thesis is unchanged: We expect new-home sale prices to bottom around mid-2025 with a mild rebound thereafter. This is supported by easing on borrowing costs, absorption of excess inventory, and further fiscal support on property buying.