China signals more property support, but substance to be key for turnaround

China’s premier and its central bank chief have sought to calm the country’s embattled property sector in recent days, but investors are waiting on something slightly more elusive: concrete steps.

People’s Bank of China Gov. Pan Gongsheng on Monday offered up a mildly upbeat assessment of China’s real estate market, saying the sector is showing some “positive signals,” according to a statement on the PBOC’s website.

Chinese property stocks rose in early Tuesday trading after Pan’s comments, but then pared some of those gains.

Shares of Longfor Group rose as much as 5.8% in early trade in Hong Kong before paring those gains to 4.5%. China Resources Land gained as much as 6.6% and was last up 3.3%. China Vanke advanced 2.0%, while Shimao Group climbed 4.2%.

Pan’s comments on Monday followed a statement by Chinese Premier Li Qiang at a State Council meeting on Friday, where he said the real-estate industry is crucial to the overall economy and linked to the Chinese people’s vital interests.

Li called for “more systematic planning of relevant supportive policies” to stimulate potential demand and stabilize the real-estate market, according to state media Xinhua.

Some analysts say the statements by Chinese officials indicate a sense of urgency among policymakers to revive the sector, but they note that a piecemeal approach will only move the needle a little.

“We believe it has become clear that the marginal benefits from these [expected] easing measures would do little help to incentivize home buyers against the backdrop of an ailing economy in which people are anxious about future income and home price,” Daiwa analyst William Wu said.

“So in that sense, the market has become less and less sensitive to any conventional relaxation,” he added.

While Li’s statement may have helped to temporarily prop up property stocks, latest data reflect a different mood. New home sales by value in China plunged 32.7% in the first two months of the year from the year-earlier period. New-home sales by floor area dropped 25%, while new construction starts by property developers fell 29.7%.

Pan’s comments “signals more policy support ahead, but we don’t expect the banks will significantly increase new loans to private developers via loosening risk management controls,” Morningstar analyst Iris Tan said.

China has undertaken a series of piecemeal measures like drafting up a whitelist to provide loans to developers, lowering mortgage rates and removing some financing restrictions that had been previously imposed on property developers, but none have overturned overall sentiment.

“We believe any share price rally induced by stimulus measures would not be sustainable,” Daiwa’s Wu said.

A slowing economic recovery and weak consumer sentiment have hurt the businesses of many property developers, leading to defaults on loan payments and substantial impairments on their income statements.

But even as policymakers “have increased their rhetoric indicating stronger support to the economy,” UOB economist Ho Woei Chen said investors think Beijing has no intention to unveil any substantial measures and may “probably do just what is necessary to defuse greater risks to the economy.”

Write to Tracy Qu at tracy.qu@wsj.com and Sherry Qin at sherry.qin@wsj.com