Investing.com-- China’s housing market sales will likely take at least six to 12 months before stabilizing, Morgan Stanley analysts wrote in a recent note, with a bulk of this stability tied to just how the government rolls out funding support. 

MS analysts noted that China’s housing market reacted positively to recent measures from the government to support the sector, while also noting that China’s latest move- which heralded potential government buying of inventories- exceeded expectations. 

The People’s Bank of China will also set up a 300 billion yuan housing relending facility.

But the execution funding and timing of the new measures will be crucial in how well the market recovers, particularly the inventory buying and funding plans. MS analysts said that at least 80% of the funding requirements for the government’s inventory digestion plans were not yet fulfilled. 

Beijing also needed to specify how the inventory management will be priced, and what developers will be prioritized- between state-owned and private enterprises. 

MS analysts said a “base-case” scenario entailed at least another six to 12 months before housing sales stabilized. 

“Faster execution of the support measures, early clarification of the questions above, and an incremental step-up in efforts when needed, could imply potential upside to earlier earnings growth reacceleration, as well as a better outlook for China coming out of deflationary pressure,” MS analysts wrote in a note.

China’s property market- which accounts for at least a quarter of the world’s second-largest economy- has been a key point of pressure on growth, as it saw a prolonged downturn over nearly four years.

The downturn was also marked by several high-profile defaults, such as China Evergrande Group (HK:3333) and Country Garden Holdings Company Ltd (HK:2007), which were among China’s biggest developers.

While Beijing had rolled out a string of monetary stimulus measures over the past two years to support the sector, they had offered little relief. The government was seen only recently implementing its most targeted measures yet for the property market.