Shanghai will raise the ceiling of loans drawn from public housing funds to 1.2 million yuan ($193,320) from 800,000 yuan, the local authority said Thursday.

Currently, a first-time home buyer in Shanghai can borrow as much as 400,000 yuan from the fund to buy a home, while a family can borrow up to 800,000 yuan. Starting from Wednesday (April 15), the lending cap will be raised to 600,000 yuan and 1.2 million yuan, respectively, Shanghai Provident Fund Management Center said in a statement posted on its website.

Second home buyers for improved housing conditions will also enjoy the same treatment as first-time home buyers, according to the statement.

Starting from May 1, the center will also relax requirements for people using public housing funds to rent houses. 

"The policy adjustment has sent a positive signal to the property market," Yan Yuejin, a researcher with Shanghai-based E-House China R&D Institute, told the Global Times Thursday.

"Home buyers' debt burden will be lowered given the lower interest rate of public housing funds loans compared to commercial loans," he said. According to his calculation, the new policy could help a family save around 100,000 yuan.

The measures come as China's property market has witnessed a downturn since 2014.

Local governments should make good use of public housing funds to help low- and mid-income residents improve their housing conditions and promote the sound development of the real estate market, Chen Zhenggao, minister of housing and urban-rural development, was quoted as saying in a statement on the ministry's website on March 23.

Around 110 million employees nationwide contributed to public housing funds by the end of January, with 29 million employees having drawn 3.9 trillion yuan from the funds, the statement said.