The optimism brought about by China's property stimulus is encouraging, but further actions are necessary for a complete turnaround in the sector.

• In Beijing, there was a 81% increase in average daily sales during the holiday period compared to the previous year, measured by floor area.
• Despite a decline in the average daily transaction area of new homes across the country, the percentage of year-over-year decrease was only 27%.
• To strengthen the sector, China must implement more policies to tackle "the excess inventories," but there is a lack of a significant government effort in this regard, according to Kenneth Ho, Goldman Sachs' chief Asia credit strategist.

Analysts believe that China's property stimulus measures provided a slight increase in the market, but they are insufficient to reverse the struggling real estate sector.

During China's week-long holiday, home sales increased in certain cities due to the positive impact of stimulus measures on homebuyers' sentiment, according to a report by China Index Academy.

In comparison to the previous year's Golden Week holiday, which took place from Sept. 29 to Oct. 6, average daily sales in Beijing increased by 81% in terms of floor area during the same holiday period this year.

During the survey of 25 major cities across China, the average daily transaction area of new homes fell 27% compared to the holiday the year before, according to the report.

Tier 1 cities, excluding Beijing, experienced a decline in sales of 61%, 59%, and 57%, respectively. The report found that most other cities also saw sales decrease to varying degrees.

Since 2021, there has been a multi-year decline in home sales during the Golden Week holiday, which is traditionally a peak period for big-ticket spendings, according to the report.

In 2021, the average daily sales figure was 177,000 square meters, while in 2022 it was 158,000 square meters, and in 2023 it was 145,000 square meters, according to the report. However, in 2023, the average daily sales figure stood at 107,000 square meters.

According to William Wu, an analyst at Daiwa Capital Markets, the government's recent actions may temporarily increase market confidence, but it is unlikely to sustain in the long run without a stronger push.

Beijing-based boutique investment bank Chanson & Co.'s director, Shen Meng, advised CNBC that more emphasis should be placed on assessing the effectiveness of policies based on how sales figures evolve over extended periods.

The CIA report stated that home sales rebounded 23% compared to the six days in the October holiday last year, and that home purchase orders tend to be larger towards the end of each month.

According to a CNBC translation of a Chinese-language report, the sales figures are predicted to improve more significantly in October due to some delays in obtaining the data.

Confidence crisis

Chinese cities eased homebuying measures, including lowering mortgage rates, reducing down-payment requirements, and increasing apartment purchase quotas, in response to federal actions such as these.

Experts suggest that additional resources are required for the industry facing financial difficulties, including cash-strapped property developers, an excess of new homes inventory, and unfinished projects.

On CNBC's "Squawk Box Asia" on Wednesday, Kenneth Ho, the chief Asia credit strategist at Goldman Sachs, stated that China needs to implement more policies to address the "excess inventories" in order to strengthen the sector. However, he noted that there is not a significant effort from the government to address this issue.

Despite some tier 1 cities experiencing a rebound in home sales during the holiday, they represent a small portion of the national property market, according to Zhiwei Zhang, chief economist at Pinpoint Asset Management. He stated that this does not significantly alter the outlook for the entire property sector, as it is still uncertain when the sector will stabilize.

"Beijing's failure to implement fiscal stimulus remains a significant challenge, according to Daiwa's Wu, who believes that the market is anticipating such measures to prevent a drop in home prices."

Since 2020, when Beijing launched a crackdown on the real estate industry's high debt levels, real estate has contributed less than a quarter of China's GDP. This led to a surge of defaulting property developers and a sharp decline in home prices.