Chinese banks loosens stranglehold on struggling property market

China begins to relent after two years of resorting to almost Draconian measures to cool down an overheated property market.

Chinese banks have begun offering preferential loans for first-time home buyers; a move analysts said indicates a loosening of Beijing’s tight grip on the property sector. The move follows a statement by the People's Bank of China that China’s big four state-backed lenders would issue more loans to qualified property developers in order to boost entry level housing supply.

The government, however, has shown no signs of easing other property restrictions. These include a requirement for non first-home buyers to pay cash for at least 30% of the total value of a new home.

Bank of China Ltd, one of the country's big four banks, and the smaller Huaxia Bank now offer a 10% discount on loans for first home buyers while Agricultural Bank of China Ltd is offering 5%.

Since April 2010, China has curbed bank lending to the real estate sector and limited citizens' ability to buy multiple homes or homes in other cities in an effort to curb speculation. Prices in key cities doubled between mid-2009 to the end of 2010.