Never let fundamentals get in the way of a good sentimental story. China’s property stocks should have one of the better stories around. Not only are interest rates coming down (China has cut rates twice since last November), on Monday evening Chinese regulators announced measures to support the sector. These included reducing mortgage downpayments and improving the tax environment for people who want to sell.

So one might expect that real estate stocks would respond positively. At first, indeed, they did. Major Hong Kong-listed property names, including China Overseas Land and Investment (COLI), China Resources Land and China Vanke (which announced soft results after the close on Monday) rallied as much as 8 per cent. They ended the day in the red.

Despite a macro situation turning marginally more cheery, there are sound reasons for being bearish on the sector. Results for 2014 across more than 30 Hong Kong-listed property companies have been disappointing. Half missed internal revenue forecasts; in aggregate, sales and earnings per share fell short of market expectations by about 5 per cent. Margins were compressed as developers offloaded inventory. Barclays figures show that average selling prices have dropped nearly one-fifth in the year to date, yet inventory levels have risen from 9.5 to 14.1 months. Recently reported net debt to equity is 72 per cent compared with a five-year average of 48 per cent.