(Yicai Global) Feb. 11 -- Speculation that China is likely to loosen policy on developers’ pre-sale funds boosted real estate stocks today, but most industry sources contacted by Yicai Global were cautious about the impact of any easing.

Shares of seven property developers gained by the upper trading limit, bucking the market trend as the Shanghai Composite Index lost 0.7 percent and the Shenzhen Component Index fell 1.6 percent.

Speculation circulated late yesterday that regulators have drawn up new measures regarding pre-sale funds that are expected to relax the strict rules set in place in the second half of last year.

Pre-sale funds are the advance payments buyers make for unfinished new residential properties pre-sold by developers. Local governments have been tightening control of the use of such funds following a string of debt defaults by high profile builders.

Many areas of the country firmed up regulatory oversight to prevent “delivery risk” of new homes, Pan Hao, a senior analyst with Ke Research Institute, told Yicai Global. The move was intended to protect buyers, but some cities over did it, putting a lot of pressure on developers’ liquidity, Pan added.

“Real estate developers that are operating normally have been severely limited by the pre-sale policies,”according to the investment head of a leading developer.

Eased rules on pre-sale funds would help the industry, but senior managers at builders, investors and financiers doubt the rumor, telling Yicai Global they had not received any documents or notice about any such policy change.

“Our firm has a large amount of pre-sale funds, but it is hard to say how much we can use according to the new policy,” the chief financial officer of a prominent developer said, adding that it will all depend on the details of the local government rules.

“Local governments bear great responsibilities, so it won’t be easy to implement the new policy, but the policy details will be decided according to their actual conditions,” the CFO said.

Doubts remain about the prospects for property developers, especially private firms, the investment head of a leading real estate firm said. Local governments will probably remain prudent, he added.

Editors: Tang Shihua, Tom Litting