An overview of a new housing project in Nanning, South China's Guangxi Zhuang Autonomous Region Photo: CFP

Nanning, capital of South China's Guangxi Zhuang Autonomous Region, has become the first city to relax its home purchase restrictions, underlining the local government's desire to boost demand amid the cooling property market.

Residents with a household registration in the nearby cities of Beihai, Qinzhou, Fangchenggang and Chongzuo will be allowed to buy property in Nanning starting from April 25, the Xinhua News Agency reported Tuesday, citing a statement released by Nanning Housing Security and Real Estate Management Bureau.

Nanning began home purchase restrictions in March 2011 as part of the nationwide effort to curb speculative demand.

The bureau said the relaxation is in accordance with the provincial government's efforts to develop the Guangxi Beibu Gulf Economic Zone, which covers four cities - Nanning, Beihai, Qinzhou and Fangchenggang.

It is the first official document in the country to announce a relaxation of house purchase restrictions. Currently, more than 40 Chinese cities, including Beijing and Shanghai, have implemented restrictions on home purchases.

"The move is mainly intended to boost regional development, and partly to revive the slightly cooling property market," Wu Ning, a Nanning-based research manager with property consultancy CRIC, told the Global Times Tuesday.

The city's new home sales fell by 21 percent quarter-on-quarter in the first three months of 2014, but still recorded 18 percent year-on-year growth, according to Wu.

The policy relaxation will drive up demand, Wu noted, but is unlikely to push up housing prices, given that the city still has a large inventory of 5.46 million square meters of unsold property, which would take about 13 months to sell.

Also, prospective homebuyers expect further price cuts and credit remains tight, Wu said.

China's property market has shown signs of cooling down since the beginning of this year, with declines in home sales nationwide and more developers cutting property prices.

China Vanke Co, the country's largest property developer by revenue, reported late Monday a year-on-year drop in both revenue and net profit in the first quarter of 2014. Its net profit fell by 5.23 percent, the first quarterly decline since 2002.

There have also been rumors about a relaxation of property policies in Tianjin and Hangzhou, with policymakers from the central government having reiterated in the past two months that different cities need to implement different policies tailored to the development of the local market.

Tianjin's Binhai New Area is considering changing its home purchase policy, Xinhua reported Tuesday, citing a press conference held Monday in Tianjin. Residents who do not own a home in Binhai will be allowed to buy property there, the report said.

Hangzhou, capital of East China's Zhejiang Province, was the first city to see a cut in prices by developers in order to spur sales in February.

The city is also likely to relax home purchase restrictions after the Labor Day holidays in May, the 21st Century Business Herald reported Tuesday, citing local property developers.

But an official with the Hangzhou Housing Security and Management Bureau told the Global Times Tuesday that she had not heard of any such policy relaxation.

"Local governments' moves could help support the cooling property market in these cities," Zhang Hongwei, research director of Shanghai-based property consultancy ToSpur, told the Global Times Tuesday.

Analysts expect more second- and third-tier cities will relax restrictions.

"Cities with excess home supply are likely to fine-tune their home purchase restrictions to boost local property markets," Zhang said, citing cities in Zhejiang Province and Ordos in North China's Inner Mongolia Autonomous Region.

The real estate sector is expected to drag down China's GDP growth by 0.54 percentage points in 2014, as growth in real estate investment will slow down, analysts from Haitong Securities said in a research note published last week.