BEIJING May 6 More Chinese cities are rolling out measures to encourage home purchases, expanding efforts by local governments to support the cooling property market as authorities come under pressure to steady China's faltering economy.
The eastern city of Tongling in the Anhui province has introduced steps including providing tax subsidies to first-home buyers, and cutting downpayment to 20 percent from 30 percent for selective buyers, a statement on the city's government website said on Monday.
Ningbo, the coastal city of the eastern Zhejiang province, has also relaxed home purchase restrictions, the official China Securities Journal newspaper reported on Tuesday, quoting a meeting held by a local industry association.
By softening the rules, the local governments are effectively reversing a near-five-year-old policy of reining in China's frothy property market, underscoring policymakers' resolve to support an economy growing at its slowest pace in decades.
China's growth engine has lost steam in the past year, squeezed by lacklustre demand for exports and the government's push to cut its own investment in a bid to reshape the economy.
The moves follow recent similar measures by three other cities -- the southern city of Nanning, the eastern city of Wuxi and the Xiaoshan district in the eastern city of Hangzhou -- to relax property controls by easing rules for buying homes or land.
China's home prices rose at double-digit rates in most cities last year, but the market has shown signs of cooling since late 2013 as authorities clamped down on property speculation, and as banks made it harder for home buyers and small developers to get loans.
A cooling property market puts more pressure on regional economies as incomes of local governments take a hit. Analysts expect more cities to follow suit as a recent cooling in land prices will likely further crimp local governments revenues.
"If property activities weaken further, we think the government may allow various local governments to relax home purchase restrictions and cut down the current hefty down-payment requirements," economists at UBS said in a note to clients.
Previous figures from land ministry have shown that gains in residential land prices slowed for the first time in nearly two years in the first quarter, and are likely to slow further in the second quarter. (Reporting By Xiaoyi Shao and Koh Gui Qing; Editing by Shri Navaratnam)