China is working on a new basket of measures to support the property market after existing policies failed to sustain a rebound in the ailing sector, according to people familiar with the matter.

Regulators are considering reducing the down payment in some non-core neighborhoods of major cities, lowering agent commissions on transactions, and further relaxing restrictions for residential purchases under the guidance of the State Council, the people said, asking not to be named because the matter is private.

The government may also refine and extend some policies laid out in the sweeping 16-point rescue package it rolled out last year, the people added. The plans have yet to be finalized and may be subject to change, according to the people.

The housing ministry didn’t immediately respond to a request for comment.

China’s property sector has avoided a collapse but remains a key drag on the world’s second-largest economy. Signs of renewed weakness are emerging in the residential market, with a rebound in home sales slowing in May to just 6.7% from more than 29% in the previous two months.

“The basic picture was one of regression,” Bloomberg Economics and Intelligence analysts including Chang Shu and Kristy Hung wrote in a May note. “Despite signs of steadier activity, though, the sector is still sick.”

China’s recovery lost momentum in April after an initial burst of consumer activity. Economists surveyed by Bloomberg now expect gross domestic product to expand 5.5% this year from a year ago, edging down from a prior estimate of 5.6%. Home price growth also slowed in April.

Despite a broad range of policies last year, a mountain of developer debt — equal to about 12% of China’s GDP — is at risk of default and poses a threat to financial stability, according to Bloomberg Economics.

Here are some existing measures in place:

• Lower mortgage rates for first-home buyers if newly constructed house prices drop for three consecutive months
• A nationwide cap on real estate commissions to boost demand
• Allowing private equity funds to raise money for residential property developments
• Pledging 200 billion yuan ($28 billion) in special loans to ensure stalled housing projects are delivered
• A 16-point plan unveiled in November that ranged from addressing the liquidity crisis to loosening down-payment requirements for homebuyers

In the coastal city of Qingdao, the government this week lowered the down payment ratio for first- and second-time home buyers in areas not subject to purchase restrictions, local news reported.

A number of developers are struggling to get creditor support for their restructuring plans after China’s real estate sector defaulted on more than 100 dollar bonds.

Two of the country’s most high-profile developers Dalian Wanda Group Co. and China Evergrande Group are showing escalated signs of distress.

Wanda is on an asset-selling spree to generate more liquidity, while seeking a loan relief plan that may allow it to extend principal repayments for some borrowings from Chinese banks, people familiar said in May.

Evergrande said this week it faces more than a thousand lawsuits involving 350 billion yuan. The embattled property developer has yet to win enough support from creditors for its overseas debt restructuring plan.

Speculation about potential support measures helped propel a gauge of Chinese property developers to a more than 6% gain on Friday, the most since December.

--With assistance from Emma Dong and Fran Wang.