China's pledge to nearly double the loan quota for unfinished residential projects to ¥4 trillion ($562 billion) fell short of market expectations, causing property shares to retreat as investors looked for stronger policies. The government set the new year-end target for loans to so-called "white-list" property projects after disbursing ¥2.23 trillion as of Oct 16.
The measure, aimed at ensuring home completion, was part of a basket of initiatives announced during a briefing. The plans underwhelmed, with some analysts calling them "incremental." A gauge of property stocks in Hong Kong fell more than 8%, with Chinese stocks surrendering earlier gains.
Authorities face a high bar to revive a faltering stock market rally, even as Housing Minister Ni Hong and other officials expressed confidence the government could halt the decline of the real estate sector. China's residential market is starting to find its bottom, they added.
They are expecting it "to be neither a driver or a drag of economic growth, but a stabilizer going forward," he added. The "white-list" program is part of a top-down plan to ensure unfinished homes are delivered to buyers, and prevent another widespread mortgage boycott.
China is also weighing whether to allow banks to issue loans to buy idle land and increase affordable housing support for families with two children or more. The government will also renovate 1 million homes in older, rundown dwellings in large cities. The move follows the government's efforts over the years to renovate shantytowns, albeit at a smaller scale compared with initiatives made between 2016 and 2018.
The "market may be disappointed about no concrete number for special bonds for buying unsold units," said Raymond Cheng, head of China property research at CGS International Securities Hong Kong.
