SHANGHAI, May 28, 2024 (BSS/AFP) - Shanghai has relaxed rules on buying property in the city, as local governments across China aim to ease an agonising real estate crisis that is dragging on the economy.

Many cities imposed restrictions and tough credit requirements on home purchases well over a decade ago in an effort to tamp down soaring prices and rampant speculation.

But they are now reversing those policies in a bid to stem an economic slump characterised by a debt crisis among developers, low demand and falling prices.

On Monday, economic powerhouse Shanghai -- China's largest and richest city -- said it would reduce the number of years that people were required to live there before they could buy property. Purchasers only have to have resided in the city three years, instead of five.

The megacity also said it would reduce the minimum down payment for commercial housing mortgages to 20 percent, as well as permit families with two or more children to buy an additional home.

The announcement followed similar moves in major Chinese cities such as Hangzhou and Xi'an this month, reducing purchase restrictions for first-time buyers.

And the central government has moved in recent weeks to stem the crisis in the property and construction sector, which long accounted for a quarter of gross domestic product.

This month, Beijing cut the minimum down payment rate for first-time homebuyers to its lowest level in history and suggested the government could buy up unused commercial real estate.

No details were provided on how many houses would be bought.