A national housing bank should be created to optimize the use of China's Housing Provident Fund and help stimulate the sluggish market, according to officials.

Zhang Qiguang, head of the fund's supervision department at the Ministry of Housing and Urban-Rural Development, said it is time for China to establish a policy-based housing financial institution or a national housing bank to boost housing demand.

The property sector is still one of the key driving forces powering the world's second-largest economy and any sudden market contraction could trigger serious risks related to debt default and to the shadow banking sector, Zhang wrote in the Economic Observer newspaper on Sunday.