(Yicai) April 2 -- Zhengzhou, the capital of China’s central Henan province, will buy and do up 10,000 second-hand houses this year to boost property sales in the city.

A platform company funded by Zhengzhou will buy properties that are less than 20 years old and revamp them into government-subsidized rental homes, according to a policy the local government released yesterday. 

The city will also launch a service platform to post information about homes for sale to make the pre-owned property market more transparent and help buyers and sellers close deals faster.

If the properties Zhengzhou buys are on average 100 square meters each, the policy will create additional demand for new properties of more than 1 million sqm, equal to 17 percent of new home transactions in the city’s central areas last year, according to a report by CRIC Research Center.

“Residents sell old houses and buy new ones to improve their living conditions, making the property market more active,” Guan Rongxue, a senior analyst at the Zhuge Real Estate Data Research Center, told Yicai. For many reasons, it usually takes a long time for them to sell their old homes, so the new policy can help to unleash demand for pre-owned houses, she added.

But buying and renovating these properties will require a lot of money, so the Zhengzhou government must make sure this does not overburden its finances, Guan cautioned.

One of the key factors for successfully implementing the new policy will be whether the price of pre-owned homes determined by government-hired assessors will be acceptable to both the buyers and sellers, the CRIC Research Center’s report said.

Many local governments have issued policies to help residents who want to improve their living conditions to sell up quickly. But only a few have offered to buy these properties, with Zhengzhou being the only megacity to do so, Yicai found.

Editors: Tang Shihua, Martin Kadiev