Local boosts for properties can backfire

A number of local governments are planning to lift restrictions previously imposed on the purchase of properties. While the move will provide a much-needed boost to the market, it is hard to improve the fundamentals of the sector.

The property market has become bearish since early this year. In June, the average prices of 100 major Chinese cities dropped by 0.5 percent month-on-month, according to the China Index Academy. It is the second consecutive month prices have fallen.

The downturn has worried both developers and local governments since the latter are heavily dependent on revenues related to property development and sales.