BEIJING - Chinese banks, property developers and regional governments are intensifying efforts to drag the housing market from its worst slump in two years by allowing people to buy more than one home, slashing prices and launching unorthodox promotions.

The property sector, which accounts for about 15 percent of China's economy and directly affects some 40 industries from furniture to steel, is of increasing concern to companies and policy makers as it drags on growth.

The most powerful support measure may be yet to come.

Chinese media said on Tuesday that one of China's top four State banks planned to discount mortgage rates by 30 percent and relax lending rules for those buying a second home.

Mortgage rule changes said to be in the pipeline

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Whether the flurry of measures can stoke growth in a sector that is crucial to the world's second largest economy remains to be seen.

Even in central Beijing, one of the few cities left in China where home purchase restrictions are still in place due to record-high prices, the sector is feeling the pinch.

Lu Yanzeng, a property agent, said he had not sold a single home in two months. Business this year "is very so-so, it's not as good as last year," he said. "Sales of second-hand homes are slow, but new home sales are brisk."

China's property market, where prices surged to all-time highs for five consecutive years, is experiencing its sharpest slowdown in around two years.

Average new home prices fell for a fourth consecutive month in August by 1.1 percent, meaning the market is now close to wiping out gains seen over the last year. Compared to a year ago, sales as measured by floor space were down 12.4 percent.

While the slowdown in a heated market has benefited millions of Chinese, for whom soaring house prices have made home ownership a distant dream, slackening activity has also raised concerns about the health of China's economy.

It is straining already softening domestic demand and pushing overall fixed-asset investment to lows not seen in nearly 14 years on a cumulative basis between January to August.

Falling home prices are also fuelling credit risks.

State news agency Xinhua said on Sunday that 32 small property developers in the city of Handan in North China have defaulted on loans that were borrowed illegally from an underground market.

That prompted the local government to arrest several executives to stem local investor panic.

No bank or official has so far confirmed media reports that mortgage rates would be lowered, partly out of fear of being criticised for reflating China's property bubble.