China’s US$1.7 trillion housing market is getting some positive vibes from local government officials in pockets of locations, helping property developers recover from the crushing effects of policy tightening in the industry. Foshan in southern Guangdong province would be “open to and welcome investment by property firms” and would take steps to help lower their cost of fundraising,” according to a Friday announcement labelled as “measures for a good start of economic development in the first quarter.” The government will try to allocate presale funds to developers in a faster way as part of its proposal to stimulate the local economy. Foshan, one of the nine mainland cities that form the Greater Bay Area, is home to some of the nation’s biggest groups including appliances maker Midea Group and condiment producer Foshan Haitian . “The direct support for developers in their land purchase and development is critical,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institute. “More cities may follow Foshan with a clear, favourable tone.” Foshan’s move marks the first explicit support for the beleaguered real estate sector in one of China’s wealthiest yet troubled regions. Many big developers in the province, including China Evergrande and Kaisa Group have teetered near collapse since the central government imposed its “three red lines” policy in August 2020 to rein in excessive leverage. That support appears increasingly critical as the national economy lost further growth momentum last quarter, the government said, despite measures last month to inject liquidity into the system and lower corporate funding costs for the first time since April 2020. The central bank on Monday eased the medium-term lending facility in yet another move to spur the economy. “We forecast a worsening [economic] slowdown in the first quarter, which should impel Beijing to take more aggressive measures to boost growth,” said Lu Ting, chief China economist at Nomura, Japan’s biggest brokerage. Still, S&P Global Ratings on Monday forecast home sales to shrink 10 per cent this year, as home prices in 70 major mainland cities fell for a fourth month in December. While mortgage easing has helped stabilise the market, sales are unlikely to return to pre-tightening levels, it added. While not as explicit as the Foshan stance, some other smaller cities are quietly loosening curbs on home sales. For example, authorities in Beihai in the southwestern Guangxi province have lowered the down payment requirements for homebuyers. Buyers of a second home can apply for up to 60 per cent mortgage financing using their housing provident fund, up from 40 per cent previously, the Beihai Provident Fund Centre said in a filing on January 12. “The real estate sector would also benefit from the cut as it prompts more liquidity in the market,” Yan at the Shanghai institute said. “Moreover, the mortgage rate may also get lowered following the cut which would help to boost home transactions.”