*

More cities likely to follow Beijing and Shanghai

*

Some analysts say confidence in major cities' property

markets

improving

*

But more measures seen as needed to boost consumer

confidence

(Recasts and writes through with Beijing measures announced

late Monday)

By Liangping Gao and Joe Cash

BEIJING, Nov 19 (Reuters) - Beijing and Shanghai have

announced tax breaks to spur home purchases as distress in the

property sector continues to drag on growth in the world's

second-largest economy.

Other major Chinese cities are widely expected to follow

suit and the measures come on the heels of some tax breaks on

home and land transactions unveiled by China's finance ministry

last week.

Beijing and Shanghai residents looking to sell an existing

property will be exempt from paying the value-added tax so long

as they have held onto it for more than two years, statements

from local authorities said on Monday.

The two megacities also raised the standard for levying deed

tax to properties larger than 140 square metres (1,500 square

feet), up from 90.

Chinese policymakers urgently need to arrest a slump in the

property market, once a key growth driver that at its peak

accounted for around a quarter of economic activity. But a

broader consumer and investor confidence crisis has glued

prospective buyers' wallets shut.

The steps by Beijing and Shanghai have done little to boost

property stocks. China's real estate share index

has lost about 1% so far this week while an index for Hong

Kong-listed mainland property developers is roughly

flat.

The new measures this month come on top of a raft of rule

changes for the property sector at the end of September,

including a cut in the minimum down payment ratio to 15% for all

housing categories and a relaxation in home purchase

restrictions.

"The policy pivot since September has been effective in

reviving demand and supporting housing and stock prices," said

Xu Tianchen, senior economist at the Economist Intelligence

Unit. "However, China's economy is not yet on a firm footing,

and policy support has to be bold and sustained to revive

confidence."

Zhang Dawei, an analyst at property agency Centaline, said

confidence in near-term prospects for the country's real estate

markets had improved.

"The property market in some cities, especially tier-one and

tier-two cities, can be judged to have bottomed out, and the

property market stabilisation will be the trend," Zhang added.

Analysts also said, however, that officials will need to

roll out further policy support to tackle the wider stresses

dragging on consumer confidence.

"To reignite the growth engine of the property sector,

policymakers must address residents' expectations regarding

economic and income growth, and offer a more stable outlook on

housing prices," said Bruce Pang, chief economist at JLL, a

property consultancy company.

Other tax breaks announced by both Beijing and Shanghai

include eliminating the distinction between so-called "ordinary"

and "non-ordinary" housing when value-added taxes are levied on

property sales. Shanghai will also eliminate the distinction

when it levies personal income taxes on property sales.

"Non-ordinary" housing consists of properties of 144

square metres or larger which had previously been subject to

higher taxes.

($1 = 7.2366 Chinese yuan)