China reportedly is taking new steps to support its property market

The backstory: As we’ve reported before, China's property development market is no small fry when it comes to the nation's economy, with some estimates saying it makes up a big chunk of anywhere from 17-29% of China's GDP. But it’s had a wild ride over the last few years. Basically, housing prices have gone through the roof, making it nearly impossible for most people to snag an affordable place. And to top it off, property developers are drowning in an ocean of debt. Not a great combo.

Take Evergrande, for example. It used to be one of China's property giants until it shockingly went into default. We're talking about a company with around US$300 billion in liabilities, making it the most indebted property developer in the world. To fix this mess, Evergrande is planning a massive debt restructuring that it hopes will bring things back on track within three years, and it's probably the largest company rescue mission in China's history.

More recently: Last year, Chinese regulators came up with a 16-point plan to boost the struggling property sector. The goal was to make sure the property market's development grew in a healthy and stable way. To make that happen, they’re allowing banks to lend more money to developers and making it easier for people to buy homes by reducing down payments, slashing mortgage rates and giving developers better access to funds from pre-sales.

But even with all these efforts, the property market is still in a slump. In fact, home sales in May didn't pick up as much as the market had hoped, and financial experts lowered China's GDP growth forecast from 5.6% to 5.5%. The government has already set a really conservative GDP goal of 5%. Plus, industrial output, retail sales and fixed investment in April were weaker than expected.

The development: Now, China is reportedly going the extra mile to boost its struggling property market. Rumor has it that Chinese regulators are cooking up some ideas like lowering down payments in specific neighborhoods, slashing agent commissions and making it easier to buy homes. For example, in one city, Qingdao, the government reportedly already lowered the down payment ratio for homebuyers in certain areas without purchase restrictions.

Now, these ideas are still in the early stages, so we can’t confirm anything yet. But just the thought of these measures has got people feeling optimistic about the Chinese economy bouncing back, with the yuan jumping and Chinese stocks getting a boost after these reports.

Key comments:

“Housing market in most cities have become lackluster since April as the release of pent-up demand for home purchases came to an end,” said Chen Wenjing, associate research director at China Index Holdings.

“Policy support is important, but the question is, which policy stimulus is most important,” said Haibin Zhu, chief China economist at JPMorgan Chase, in an interview with Bloomberg TV last month. “Industry policy probably will play a more important role, then fiscal stimulus, particularly on the consumption stimulus.”

“If you look at the measures, a lot of them address financing issues for the developers that are still in relatively good financial health, so that will help,” said Thomas Helbling, deputy director in the International Monetary Fund’s Asia Pacific Department, to CNBC in February. “But the problems of the property developers’ facing severe financial difficulties are not yet addressed. The issue of the large stock of unfinished housing more broadly is not yet addressed.”