TMTPOST--Shanghai has taken a series of measures to prop up the sagging local real estate market and promote stable and sound development, including relaxing certain restrictions on home purchases and reducing financial requirements. The new policies take effect on Tuesday.

In a notice issued on Monday, four departments of the Shanghai Municipal Government said that they will further optimize home purchase policies, support the demands of families with multiple children, and adjust mortgage policies. The notice contained nine new policy measures.

The down payment percentage for first-time home buyers has been cut to 20% from the previous 30%, and the percentage for those who buy second homes has been cut to 35% from 50%, according to the notice. 

Meanwhile, the minimum five-year mortgage rate for first-time home purchases has been lowered to 3.5%, while the rate for second home purchases has been reduced to 3.9% from 4.5 %. Families eligible for the housing trade-in program will receive a subsidy of up to 30,000 yuan (US$4,142.5) when buying a new home, Shanghai authorities have announced.

Households with two or more children are now eligible to purchase an additional housing unit, to meet the needs of families with more than one child.

Shanghai had barred households since 2011 from owning a third apartment to curb the red-hot property market.

The authorities will also allow more non-local residents to own a house in Shanghai. People from other parts of Chinese mainland who paid taxes to Shanghai authorities for three consecutive years will now be allowed to buy an apartment in Shanghai. Previously they would have to have done so for five years to qualify.

For employees purchasing their first home, the maximum loan limit for individual provident funds (including supplementary provident funds) will be adjusted to 800,000 yuan, and 1.6 million yuan for family provident funds.

For employees purchasing a second home, the maximum loan limit for individual provident funds will be adjusted to 650,000 yuan, and for 1.3 million yuan for family provident funds.

Meanwhile, Shanghai will establish and improve the housing security system by exploring the acquisition and bulk leasing of suitable housing sources through state-owned platforms and other entities.

The city will implement urban renewal projects to improve the living conditions and environmental quality for the general public through multiple channels. Additionally, it aims to enhance housing quality by supporting the construction of green, low-carbon, intelligent, and safe homes.

Shanghai's move came after a number of other Chinese cities issued similar policy measures to boost the real estate market. Many of the cities moved to relax restrictions on home purchases, cut down payments and lower mortgage rates.

At the national level, several central government departments announced a massive package of policies to revive the real estate industry on May 17. The policy measures include lower payment ratios and lower mortgage rates.

The policy measures came after a meeting of the Political Bureau of the 20th Communist Party of China Central Committee on April 30 called for research into policies to reduce housing inventory and improve the quality of newly added housing, noting that efforts should be made to establish a new model for the real estate sector to promote its high-quality development.