(Yicai) June 5 -- Changsha in central China's Hunan province has become the first provincial capital to encourage local property developers to voluntarily refund home deposits if the buyers change their minds.

Builders in Changsha's nine county-level administrative regions are encouraged to commit to a guarantee of refunding the deposit within seven days of application, the local authority for housing transactions announced recently. 

Implementing a no-reason-to-return policy would reduce house purchasers’ concerns about the future and make them more willing to sign new contracts, boosting market confidence, Yan Yuejin, research director at the E-House China Research and Development Institute, said to Yicai. Yan further said that the seven-day policy would ensure the effectiveness of commitment. Earlier, some cities promised refunds but the process was slow, which hurt home buyers' trust.

A refund policy would bring confidence and guarantees to home buyers on a larger scale, said Zhang Bo, director of think tank 58 Anjuke Institute. Moreover, purchasers would hesitate less if the developers promised to refund the difference if property prices happened to decline, Zhang added.

Since mid-May, Changsha has launched multiple favorable policies targeting the real estate market such as cutting housing provident fund loan rates and lowering the minimum downpayment. 

The moves are paying off as last month, housing transactions in Changsha jumped 40 percent from April and narrowed the pace of falling from a year ago, according to data from real estate consultancy CRIC. Moreover, average selling prices rose as the market recovered with sales of high-priced units in urban areas. 

Editors: Tang Shihua, Emmi Laine