China's third-tier city of Wuhu, in eastern Anhui province, has relaxed restrictions on purchases of homes, easing limits on multiple home buyers and raising cash subsidies, the official China Securities Journal reported on Friday.
It is the second city after Zhongshan in Guangdong province to loosen policy measures targeting the once-hot real estate market, after sales volumes and price rises have come off the boil.
Some economists had predicted that local governments would relax measures against the property sector even as the central government maintains its tightening stance this year.
Average Chinese home prices have edged lower since October and some economists worry that slowing property transactions and investment could dent growth in the world's second-largest economy, which is already suffering a slowdown in export growth.
Compared with major cities such as Beijing and Shanghai, Wuhu and Zhongshan imposed much lighter curbs against multiple home buyers.
Citing a document published on the local government's website, the journal said that Wuhu would exempt anyone buying ordinary homes for self-use from deed tax and would offer cash subsidies of 150 yuan ($24) per square meter for those buying units smaller than 70 square meters.
Last year, the city only offered full deed tax refunds to those buying their first homes and gave 100 yuan per square meter subsidies for buyers of homes below 70 square meters.
Wuhu has also raised cash subsidies for buyers in 2012 who have the kind of education and skills needed in the city.
Chinese Premier Wen Jiabao has reiterated that Beijing would keep its property tightening stance in place this year to pull home prices back to what he called a reasonable level.
However, a statement by the central bank earlier this week to funnel more loans to first-time home buyers with lower mortgage rates added fuel to expectation about a possible policy relaxation.