By Jiahui Huang

Chinese property stocks climbed in Hong Kong after Beijing and Shanghai eased policies for home buyers, but analysts are divided on whether the momentum will last.

The Hang Seng Mainland Properties Index, which tracks Chinese property developers, was 4.7% higher at the mid-day break Friday, lifting gains this week to 6.7%. CIFI Holdings rose 8.5% and Agile Group added 6.1%, while Longfor advanced 7.1%. Country Garden Holdings, Sino-Ocean Group, Kaisa Group and Guangzhou R&F Properties all put on more than 5%.

The rally, which helped lift the benchmark Hang Seng Index 3.0% higher, comes a day after China's two biggest cities took measures to spur homebuying, including by cutting the amount of money required for down payments.

Nomura analysts think the measures will have "marginally positive impact" on local property market sentiment, generating "some demand for housing upgrades in both cities."

Still, there aren't likely to be "any sustainable outperformance in developers' share prices until there is more clarity on whether property sales can bottom out in the next few quarters," Nomura analysts Jizhou Dong and Riley Jin wrote in a research note.

China's property sector has continued to drag on the world's second-largest economy despite stimulus efforts. Data released Friday showed that new-home prices fell in November, declining at a faster clip than in October. Home sales by value dropped 4.3% from a year earlier in the first 11 months of 2023, also sharper than the decline recorded over the January-October period.

The big question now is whether housing prices can regain growth momentum after the two major cities' easing policy, the Nomura analysts said. They think that to address the property-market downturn, the central government will need "to announce bolder and more aggressive steps."

Chinese investment bank CICC seems more positive that the latest measures will boost sentiment. Improvements in first-tier cities' property markets often help spark recoveries in other cities, CICC analysts Yu Zhang and Zhida Song wrote in a research note.

Dan Wang, chief economist at Hang Seng Bank, is not convinced.

"I completely disagree with what they [the CICC analysts] wrote," Wang said in an interview with The Wall Street Journal.

Though the fundamentals of property markets in first-tier cities like Beijing are positive, house prices are unlikely to rise for the next one or two years, even in Shanghai, which has the strongest fundamentals, she said. Wang thinks the easing in Beijing and Shanghai will only boost local demand somewhat, with the impact unlikely to extend to second-tier cities.

Though the latest easing is in line with the emphasis policy makers put on stabilizing the property market at the recent Central Economic Work Conference, Wang said it won't have the desired effect of fueling homebuying demand.

"Home prices are still too high," she said.

Write to Jiahui Huang at

(END) Dow Jones Newswires

12-15-23 0015ET