(Yicai) Aug. 12 -- The government of Zhuhai, a major city in China's southern Guangdong province, has started gathering local properties, making it the latest city to benefit from the country's new policies to support the real estate sector.

Huafa Group, which is under Zhuhai State-owned Assets Supervision and Administration Commission, will spend up to CNY12 billion (USD1.7 billion) to buy presale-eligible commercial housing and related parking space, or equity assets from its unit Huafa Properties, the latter announced late on Aug. 9.

Huafa Group launched the collection to implement the central government's policy of establishing a housing system that encourages home purchase and renting and enhances the local supply of affordable, talent, and commercial rental housing, Huafa Properties noted.

Reducing housing inventories has been a recent focus of supportive policies in China's real estate sector, said Xu Yuejin, an associate research director at the China Index Academy. Letting state-owned enterprises store unsold new houses is the most direct measure, Xu added.

On Aug. 1, Huafa Properties announced that Anju Group, the operator of Huafa Group's affordable housing business, will invest CNY266 million (USD37.1 million) to buy one of its subsidiaries with 79 residential properties.

To reduce the financial burden of Chinese developers, China's government issued measures on May 17, allowing city governments with large local housing inventories to acquire some commercial units at reasonable prices and use them as affordable housing. Over 30 cities in China have started collecting such stock, according to data from third-party rating agency YY. 

The policy to encourage developers to reduce inventories is conducive to easing their financial pressure, boosting market sentiment, and increasing the supply of affordable housing, Xu noted. Rolling out various related measures will help speed up the stabilization and recovery of the real estate sector, Xu added.

After surging by as much as 6.5 percent in the morning trading session, shares of Huafa Properties [SHA: 600325] traded unchanged at CNY6.03 (84 US cents) apiece as of 2.10 p.m. in Shanghai today.

Editors: Tang Shihua, Martin Kadiev