(Bloomberg) -- Chinese private developers face a 4 trillion yuan ($553 billion) funding gap to complete pre-sold homes, adding to the woes of an industry that has yet to bottom out, according to a research report by Goldman Sachs Group Inc. 

Credit support from banks — which totaled 469 billion yuan as of the end of March — “appears well below the amount needed for securing home completions,” analysts led by Lisheng Wang wrote in a report released Sunday. 

As China’s real estate crisis continues, the impact of property easing measures from last year are fading in the new homes market, according to the report. Many metrics tracking the industry continue to worsen, and developers’ funding conditions remain stretched. Plus, compared with previous major housing cycles, the magnitude of policy actions “appears small,” the analysts added. 

“The housing sector has not yet reached the bottom of the L-shaped path we expect,” they wrote. 

To improve the situation, the government needs to boost developer funding conditions and bring housing demand to “normal levels,” the analysts said. Policymakers should also aim to mitigate a contraction in real estate construction. 

However, Goldman’s calculations show that large-scale government plans in those three areas will incur “substantial costs,” well above the funding arrangements available thus far.

China is still facing an oversupply in housing especially in smaller cities. Based on the assumption that local governments and state companies can purchase inventory at 50% of market prices, lowering the supply to 2018 levels would require 7.7 trillion yuan, according to the analysts. 

The country plans to increase the share of public housing to at least 30% of the nation’s total housing stock from about 5% currently, according to a Wall Street Journal report, citing people close to policymaking. Looking at only the largest cities — known as tier-1 and tier-2 cities — the cost would be 4 trillion to 6 trillion yuan, according to the Goldman report.   

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