China to Boost Support for Unfinished Properties to $562 Billion

China’s pledge to nearly double the loan quota for unfinished residential projects to 4 trillion yuan ($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 yuan as of Oct. 16. The measure, aimed at ensuring home completion, was part of a basket of initiatives announced during a Thursday briefing.

The plans underwhelmed, with some analysts calling them “incremental.” A Bloomberg gauge of property stocks in Hong Kong fell more than 8%, with Chinese stocks surrendering earlier gains.

Read More: Chinese Stock Gains Fizzle as Briefing Lacks Major Stimulus

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.

“Policymakers are taking a more pragmatic stance on the property sector,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc. 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. Delivering China’s sold but unbuilt homes, estimated at 48 million units, will require around 3 trillion yuan of direct funding from the central government, according to Nomura Holdings Inc.

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.

Thursday’s announcements followed a slew of earlier policies by the central government to help the world’s No. 2 economy meet its growth target of around 5% this year.

China in late September unveiled a package to shore up its troubled property sector, including cutting borrowing costs on as much as $5.3 trillion in mortgages and easing rules for second-home purchases. About 50 million households are expected to save 150 billion yuan in mortgage costs following the initiative, People’s Bank of China Deputy Governor Tao Ling said during the briefing.

The country has made available 1.48 million public-housing units as of end-September, enough to meet the needs of 4.5 million young people, Ni said.

The biggest cities including Beijing and Shanghai widened the eligibility of homebuyers to purchase properties. Smaller ones like Tianjin and Chengdu have scrapped all buying curbs for new homes.

“Equity investors are looking for big headline numbers to drive stocks up further,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “As long as there’s such a mismatch in expectations, all press briefings will inevitably be disappointing.”