(Bloomberg) -- Chinese regulators urged local authorities to ensure home building isn’t impeded by creditors’ requests to freeze developers’ assets held in escrow accounts. 

The supreme court, housing ministry and central bank issued a joint notice last week calling on local governments to make sure proceeds from home presales can be withdrawn from supervised accounts for project construction if approved, even after they have been frozen by courts. A copy of the Jan. 13 notice was posted on the WeChat account of Xiangyang city’s real estate association. 

The move is in line with government efforts to ease the impact of a property industry cash crunch on the housing market. Separately, Bloomberg reported this week that regulators are considering lifting some restrictions on developers’ access to cash from presold properties tied up in escrow accounts. The housing ministry and banking watchdog may convey the instructions through window guidance to local governments later this month, people with knowledge of the matter said. 

Court-ordered asset freezes, including on proceeds from residential project sales, have grown more common as the widening liquidity squeeze makes it harder for developers to pay their bills. Yet such moves may hamper project construction if suppliers and migrant workers aren’t paid. 

“It shows that China prioritizes project construction and completion over the traditional court practice to freeze assets,” said Yan Yuejin, research director at E-house China Research and Development Institute. “Ensuring property projects won’t be abandoned is at the heart of regulatory moves to resolve property debt problems.”

Maintaining construction and delivery of homes is key to reviving buyer confidence, which has been hurt by widespread project halts at companies including China Evergrande Group. A property market slump persisted on all fronts in December, with sales, prices and investment falling despite regulatory efforts to ease some restrictions on real estate funding. 

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