Harbin, in China’s northeastern Heilongjiang province, last week became the latest city to remove restrictions on the resale of houses, hinting at a trend that could lift the mainland’s US$1.7 trillion housing market out of a slump. The city’s home prices dropped for a seventh consecutive month in February, despite a flurry of easing measures taken by the local government since October last year. The price of new homes in Harbin dropped by about 4 per cent year on year in February, while those of lived-in homes dropped by 3.4 per cent compared with last year. The withdrawal altogether of a rule that forbade new owners from selling homes within three years of their purchases could, however, “reverse the downward trend”. “We will see more cities joining the chorus, withdrawing some of the purchase and resale restrictions that they had implemented in the past two to three years, when the market was too hot,” said Yan Yuejin, the director of Shanghai-based E-house China Research and Development Institute. Shanghai homebuyers have to act fast amid price rise expectations A slump in China’s housing market has widened of late, as more developers join the ranks of defaulters, the latest being Logan Group and Sunac China. The decline comes despite a softer tone by Beijing on the sector recently, and the relaxation of some policies on the purchase and resale of homes in some cities since late last year. The downturn in the property sector was triggered by a government campaign to control borrowing among China’s highly indebted developers. The campaign is now weighing on the national economy, which is also facing other headwinds. Last week, China’s ministry of finance said that it would not expand a property tax pilot programme this year, as the current conditions were not suitable. Boost for China’s housing market as more cities, lenders aid home buying In October last year, the Harbin government became the first local government to offer subsidies of up to 100,000 yuan (US$15,497) to homebuyers under 35 . It also said that developers with good credit profiles could get back part of their presale funds held in government escrow accounts as quickly as possible to relieve cash flow pressure . The city is not alone in reversing cool measures – Qingdao and Jining in China’s northern Shandong province both retreated last month from rules forbidding the resale of homes within five years of purchase and reduced this requirement to two years. In January and February, cities in Guangxi province such as Nanning lowered their down-payment requirements and mortgage rates for first-time and second-time homebuyers. Zhengzhou , capital of the central Henan province, became the first Chinese city to ease restrictions for people who work there without hukou, allowing them to buy a second home, this month. Zhengzhou eases second-home restrictions as cities take aim at market slump “On the back of strong support from the central government, we expect to see more cities launch their own measures to support the property market, which could boost the sector share prices,” said Raymond Cheng, property analyst at CGS-CIMB Securities. Japanese investment bank Nomura also suggested that Beijing was likely to allow more local governments to ease their property curbs and introduce interest rate cuts to support the sector. “We expect the PBOC [People’s Bank of China] to cut policy rates by a moderate 10 basis points in April and cut the reserve requirement ratio by 50 basis points over the next couple of months,” said Lu Ting, chief economist at Nomura.