As the housing market slows in China, Beijing could ease its regulatory controls, potentially bolstering a China real estate exchange traded fund.

Citigroup (NYSE: C) expects “targeted easing” on home purchase restrictions, Bank of America (NYSE: BAC) believes smaller cities could see looser rules and Centaline Group, the parent of China’s largest real-estate brokerage, anticipates some cities to adjust policies, Bloomberg reports.

Property sales in the first quarter declined 5.2% year-over-year and unsold completed properties rose 23% year-over-year, according to the National Bureau of Statistics.

“Relevant departments will closely follow the changes in the property market and improve property macro-control policies accordingly,” Sheng Laiyun, a spokesman for the statistics bureau, said, answering questions on whether policies will be relaxed.

Analysts are speculating on looser policies after a 25% plunge in new construction, along with unsold inventory, weighed on China’s economic growth over the first quarter. [A China ETF for the Long Haul]

“The housing sector now poses the biggest downside risk to the Chinese economy,” Yao Wei, China economist at Societe Generale SA, said in the article. “The next batch of policy announcements is likely to be housing policy relaxation at the local government level.”

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