Loosening housing provident fund loan policies has become a frequent tool for local governments seeking to relax strict housing policies, a study by Centaline Beijing has found.

The study said that since Beijing imposed strict housing purchasing limits in Jan 2011, over 40 Chinese cities have in some ways relaxed the curb. Among the 40-plus cities, over 20 cities' measures involved housing provident fund loan policies.

Fifteen cities have raised the upper limit of provident fund loans, which means provident fund payers could borrow more money from the fund.

Three cities have lowered downpayment requirements for first-time homebuyers from 30 percent to 20 percent. Other cities shortened the time that provident fund loan payers had to wait before they could borrow money from the fund, the study said.

Among the 20 cities' which have relaxed their housing provident fund loan policies, only Chongqing's move was canceled by the central government.

"The moves (on provident fund loan policies) could effectively release genuine demand. And thus are more likely to get public support. This is why they are favored by local governments," said Xie Yifeng, president for the Realty Association of Asia-Pacific Cities.

Revenues from land transfer fees make up 40 to 60 percent of the local government's fiscal income, according to a report by the Chinese Academy of Social Sciences. The depressed housing market decreased government's incomes and created incentives for them to relax housing market controls.