BEIJING (Reuters) – China’s central city of Zhengzhou has asked residents to sell their second-hand homes to a local state-owned company and buy new ones instead, in a bid to reduce new-home inventories and boost the local property sector.

Local state state-owned company Zhengzhou Urban Development Group Co. will buy 500 second-hand homes from April 20 to June 30, according to a notice released by the Zhengzhou Real Estate Association on Monday.

Residents must buy a new home in the main urban area for a total price that is not less than the total price of the home they are selling, the notice said.

Most of China’s small and medium-sized cities have suffered frail property markets, with the entire property sector in a liquidity crisis since a crackdown on high leverage on developers in 2021.

In Zhengzhou, new home prices fell month-on-month for a 12th straight month in March, according to data from China’s statistics bureau on Tuesday.

Local cities that have been granted full autonomy to adjust property market policies have eased restrictions on home purchases, lowered mortgage rates, reduced down payments and offered subsidies for home purchases.

These policies have only limited short-term impact, partly because potential buyers have been wary of purchasing new homes amid concerns about the ability of indebted developers to deliver projects on time.

“As the bottom has yet to be confirmed, we expect property to remain a major drag on growth this year. Policies to stabilise the market will likely still be needed in the months ahead,” Lynn Song, chief economist of Greater China at ING, said in a research note on Tuesday.

(Reporting by Liangping Gao and Ryan Woo; Editing by Gerry Doyle)