SOUTH China's Foshan will allow residents to buy a second home, becoming the first city to relax government policies to rein in property prices.

Foshan, in Guangdong Province, will allow local families to buy one more home priced at less than 7,500 yuan (US$1,176) per square meter from today, the city government said in a statement on its website yesterday. More than 40 cities, including Foshan, this year limited the number of homes that each family can buy.

"This first loosening by a city government shows local governments are reluctant to strictly implement the central government's policies because of a lack of money and slowing economic growth," said Peter Bai, a Beijing-based property analyst for China International Capital Corp, the country's biggest investment bank.

More cities may follow Foshan, said Wee Liat Lee, a Hong Kong-based property analyst at Samsung Securities Co.