The move underscores Beijing's concerns over a stock of some 1 billion square metres of vacant housing - around 13 million homes or enough to house the population of Australia - and the broader knock-on effect of any defaults by struggling property developers as the world's second-largest economy grows at its slowest pace in a quarter of a century.
While encouraging migrants to buy homes in lower-tier cities seems like a remedy to boost demand, making money available to them will prove tougher. Many of China's more than 270 million migrants earn below 3,000 yuan ($462) a month, less than half the cost per square metre needed for a home in a lower-tier city such as Changzhou, in eastern Jiangsu province.
With low incomes and few assets, migrant labourers are not obviously attractive loan candidates, and the authorities will need to find property developers willing to sell homes at a discount and local governments ready to subsidize purchases.
"Conditions are not mature for migrant workers to buy unsold homes. You can't count on a certificate for housing ownership to resolve everything," said Jason Hu, head of research at Chinese property consultant Holdways in Beijing.
"Everyone wants to settle in the city, but where's the money?" said Hu, adding other issues need to be resolved such as giving migrant workers equal access to social security and public services.
Senior leaders have said China will step up efforts to tackle property inventories this year, including helping migrant workers buy or rent homes in cities, and encouraging developers to cut prices.
Authorities aim to get 100 million migrants to settle in cities by 2020, and officials in small-and medium-sized cities have pledged to give permanent resident status, or hukou, to more rural people, although access to welfare remains a concern.
Another potential obstacle is that more than 70 percent of migrant workers already living in cities prefer to rent, according to National Health and Family Planning Commission data.
"If I can earn enough I'd go back to the city near my hometown and buy a home there," said a restaurant worker in Beijing who gave just his surname of Long. "Prices here are too high, it's impossible for me to settle here," added the 26-year-old who left his village in central Hunan province five years ago.
With home ownership still a distant dream for most low-income migrant workers, the challenge is to make homes more affordable.
"The hurdle is very clear: how to encourage the low income group to purchase property - to improve affordability," said Zhou Hao, economist at Commerzbank in Singapore.
In a bid to prevent struggling developers from defaulting if they have to cut prices - and the impact this could have on the underground financial system that funds many of them - local authorities have launched a plan to pilot rural land collateral loans in 291 selected counties.
It is not yet clear whether property developers and local governments - which earn much of their revenue through land sales - will be willing to support Beijing's attempts to clear bloated housing inventory.
"I'm not sure what the government could do to 'encourage price cuts' unless it's going to subsidize them," said Yin Chin Cheong, a Singapore-based analyst at CreditSights.
Some developers welcomed the move, saying the proposal is part and parcel of China's urbanisation process.
"It would stimulate demand for housing. But these are not temporary measures to run down inventory, they are part of a long-term urbanisation," said Fan Xiaochong, vice president of Sunshine 100, a developer focused on second- and third-tier cities.
Beijing also wants low-income city residents and those living in dilapidated housing to buy cheaper unsold homes.
While parallels have been drawn with the US subprime crisis, which was also preceded by excess housing inventory, risky mortgages and aggressive lending, some experts shrugged off such a scenario.
"Mortgage penetration levels are lower and down-payments are higher compared with the US, and household debt is much lower. So it's unlikely to snowball into a sub-prime like situation," said Christopher Yip, Hong Kong-based analyst at Standard & Poor's.