Chinese leaders have vowed to arrest a slump in the housing market and boost growth after conceding that measures by the central bank to stimulate investment this week were likely to prove inadequate.

Promising to deploy “necessary spending” by the state to meet this year’s economic growth target of 5%, China’s politburo said it would increase benefits for the poorest and give local authorities the cash and power to intervene to prevent further falls in house price values.

Households with two or more children will be offered 800 yuan (£85) a month per child, excluding the first child, Reuters reported. Local authorities will have the backing of up to £213bn in extra borrowing by the state, allowing them to intervene in real estate markets, including buying empty properties.

China’s economic growth had been supported by a surge in residential housing developments and rising property values that underpinned consumer spending. An oversupply of homes in recent years has caused prices to tumble in many cities, pushing households into negative equity.

Some of the biggest property developers in the world’s second largest economy have either gone bust or been weighed down by huge debts.

The planned intervention, which came after a monthly meeting of top Communist party officials, marks a reversal of previous piecemeal policies and an admission by China’s president, Xi Jinping, that the ailing economy needed a more coordinated programme of measures backed by a larger package of subsidies.

“New situations and problems” demanded a sense of “responsibility and urgency”, state media reported, citing the politburo meeting.

A wide range of economic data in recent months has fallen short of official forecasts, raising concerns that the growth target was at risk and that a reliance on a combination of rising domestic property values and exports was holding back growth. The 5% growth target is relatively modest by historical standards.

China’s central bank cut interest rates and eased local bank lending rules this week in its boldest intervention to boost the economy since the pandemic.

The People’s Bank of China cut interest rates on existing mortgages by 0.5 percentage points and supported new lending by reducing the level of reserves banks must set aside before making loans.

After the politburo announcement, Chinese property shares jumped by more than 8%, and among companies registered in Hong Kong values jumped by 9%. The yuan and Chinese bond yields also rose.

The politburo said the government should “promote the stabilisation of the real estate market” by expanding a list of approved housing projects that could receive further financing and revitalise idle land, according to official news agency reports.

Officials “will respond to people’s concerns, adjust home purchase restriction policies, lower existing mortgage rates and improve land, fiscal, tax and financial policies as soon as possible to push forward the new model of property development”, it said.

Bruce Pang, the chief China economist at the real estate services company Jones Lang LaSalle, said the politburo’s endorsement of a further stimulus “represents a strategic shift in macro policy, from piecemeal policies to a highly orchestrated package in the right direction”.

He added: “A pickup in government spending will probably be sufficient to drive a turnaround in business confidence, market sentiment and economic activities, helping China to catch up with potential trend growth.”

Xi is understood to have faced criticism from economic advisers, including from Zhu Hengpeng, a member of a government-funded thinktank, who has reportedly disappeared.