(Yicai) Aug. 10 -- Beijing has issued a policy document to further ease home-purchasing restrictions for non-local residents and increase the maximum amount that can be borrowed from the housing provident fund, with the aim of supporting the Chinese capital’s property market.

Under the new policy, released on the evening of Aug. 7 and effective Aug. 8, Beijing residents without local household registration can now buy a home within the Fifth Ring Road -- the expressway encircling the city center and some suburbs -- after paying social security or individual income tax in the city for just one year, down from two.

Beijing introduced home purchase restrictions for non-locals in 2011 to curb speculation, setting the minimum for social security contributions or income tax payments at five years. Last December, the authorities lowered that to two years for properties inside the Fifth Ring Road and one year for those outside.

The latest move represents another substantial relaxation of Beijing’s home-buying rules and will directly expand the pool of eligible non-local buyers, said Yan Yuejin, deputy director of the E-House China Real Estate Research Institute.

Moreover, eligible first-time homebuyers can now secure a housing provident fund loan of up to CNY3.4 million (USD503,980), more than double the previous CNY1.6 million. These loans are popular due to their much lower interest rates compared with bank mortgages.

Beijing previously had the lowest provident fund loan ceiling among China’s four tier-one cities, according to a research report by the China Index Academy. The latest increase brings the city broadly in line with its peers, it said.

The think tank estimates that the most first-time homebuyers can borrow from housing provident funds in Shanghai, Guangzhou, and Shenzhen is CNY3.2 million, CNY3.6 million, and CNY3.5 million, respectively.

The maximum now available to first-time buyers in Beijing has risen to 58 percent from 27 percent of the average cost of a new home, a major boost for them, according to the report.

While first-tier cities have seen new and pre-owned home prices increase month-on-month so far this year, the increases have been modest, Yan pointed out. Because prices are still declining year on year, the market’s recovery remains fragile and continues to require policy support, he added.

The new measures are expected to boost viewings and transactions for both new and existing homes in central districts while encouraging more local residents seeking better housing to re-enter the market, Yan predicted. The China Index Academy similarly expects the policy to underpin more deals.

Editors: Tang Shihua, Futura Costaglione