China announced a number of initiatives to support the housing market in May, but China’s property woes remain a drag on growth, with some analysts saying that the measures fall short of what is required for a sustainable recovery.   

Key measures from the People’s Bank of China (PBoC), the country’s central bank, include lowering down payment requirements to 15 per cent for first-home purchases and 25 per cent for second-home purchases.

In addition, the PBoC will provide 300 billion Chinese renminbi ($41 billion) in a relending programme for local governments to acquire properties and convert them into social housing. The central bank expects the programme to boost bank lending by 500 billion Chinese renminbi. The national floor for mortgage interest rates will also be removed.

The market has divergent views on the effectiveness of these policies. There have already been various initiatives to help stimulate the property market but so far these have had a limited impact. Investors’ key concerns revolve around the implementation and whether the funding is sufficient to have a significant impact.

Wealth managers
believes that China’s growth momentum will probably be underpinned by the recent macroeconomic and housing policy support, but it seems that the housing starts may need more time to find a bottom. “Recent support measures seem to be enough for some investors to dip their toe in both Mainland China and Hong Kong stocks lately, given low valuations,” Willem Sels, global chief investment officer at HSBC Global Private Banking and Wealth, said in a note.

However, Björn Jesch, global chief investment officer at DWS, believes that India currently offers more opportunities than the Chinese market. "Chinese stocks are still burdened by the frequently low profitability of corporations,” Jesch said this week. Meanwhile, Dina Ting, head of global index portfolio management at California-based investment manager Franklin Templeton, believes that China shouldn’t be written off yet.

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