China announced on Friday that it would refund individual income tax for residents who buy new homes within one year of selling their old homes, a new effort in a package of recent incentives to encourage the sluggish property sector.

If the price of the new home purchased is higher than or equal to the cost of the sold home, all personal income tax paid will be refunded, according to a statement released by the Ministry of Finance.

For those who buy a new home cheaper than the old home, personal income tax will be refunded in proportion, the statement said.

The new home should be located in the same city as the old home, and the tax refund policy will be effective from October till the end of 2023, the statement said.

Real estate is still one of the driving forces for economic growth in China, and the demand and supply equilibrium relies on the market, Professor Liu Baocheng, from the University of International Business and Economics, told CGTN on Friday.

This tax refund policy announcement comes just one day after China authorized local governments to relax the floor on mortgage rates for first-time home buyers.

China's central bank said on Thursday that local governments could adopt city-specific policies to keep, reduce or scrap the floor for such buyers by the end of this year.

The mortgage rate floor could be relaxed in cities where newly constructed commercial and residential property prices fell on a monthly or yearly basis from June to August, the central bank said.

At least 23 of China's 70 major cities, whose housing prices are recorded monthly by the National Bureau of Statistics, meet the requirement, according to E-house China Research and Development Institution.