Workers at a construction project in Qingdao, Shandong province.China will revive mortgage-backed debt sales this week after a six-year hiatus, as the government extends more help to homebuyers in a flagging property market. YU FANGPING/CHINA DAILY

The government will revive mortgage-backed debt sales this week after a six-year hiatus, as China extends more help to homebuyers in a flagging property market.

Postal Savings Bank of China Co, which has 39,000 branches in the country, plans to sell 6.8 billion yuan ($1.1 billion) of the notes backed by residential mortgages on Tuesday, according to a July 15 statement on the website of Chinabond. The last such security in the nation was sold by China Construction Bank Co in 2007, Bloomberg-compiled data show.

Premier Li Keqiang is seeking to avert a collapse of the real estate market after data last week showed new home prices dropped in a record number of cities in the world's second-largest economy. The central bank in May called on the nation's biggest lenders to accelerate the granting of mortgages to first-home buyers, and cities including Nanning, Hohhot and Jinan eased property restrictions.

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"The government has eased its attitude toward the property market since property demand plunged this year," said Wang Ying, an analyst in Shanghai at Fitch Ratings Ltd. "The policy measures it has taken this year have conveyed a message that property curbs will not be as strong as before."

Selling mortgage-backed securities can help banks free up space on their balance sheets for more lending by transferring the risk of the loans to buyers of the products. Authorities are allowing the revival of such offerings after housing prices fell in 55 of the 70 cities last month from May, the National Bureau of Statistics said on Friday, the most since January 2011 when the government changed the way it compiles the statistics. New mortgages in Shanghai, China's financial center, declined 2.2 percent in the first half, according to a statement posted on the central bank's Shanghai head office website last week.

The pressure on Chinese developers was underscored by the collapse in March of Zhejiang Xingrun Real Estate Co south of Shanghai. Developers, including China Vanke Co and Greentown China Holdings Ltd, have cut property prices since March to boost sales. The slump comes as economic growth is set to cool to 7.4 percent this year, the slowest in more than two decades, according to the median estimate of economists surveyed by Bloomberg.

"The economy's slowdown and the property market's weakness were quite obvious in the first half," said Fitch's Wang. "Many developers' first-half sales accounted for only less than 50 percent of their annual targets while they used to achieve more than 50 percent of the targets in previous years."

The northern city of Hohhot responded by waiving restrictions on the number of properties each resident is allowed to own, according to a statement on the local housing authority's website on June 27. The eastern Chinese city of Jinan canceled purchase limits from July 10, the official Xinhua News Agency reported on its official micro blog earlier this month, citing the local property management bureau.

Residential mortgage-backed debt is one of the supplemental measures the government can use to help avert a plunge in the property market, according to Frank Chen, Shanghai-based head of China research at CBRE Group Inc, a commercial real estate services company based in Los Angeles.

Cooling economic expansion has pushed the yield on China's benchmark 10-year sovereign note down 25 basis points this year to 4.3 percent. The yuan has fallen 2.5 percent against the dollar in the same period.