China may impose a property tax soon, to try and curb soaring property prices, China Business News reported on Tuesday.

The newspaper cited an unidentified source who provided detailed information of the property tax.

"The tax will be from 0.8 percent to 20 percent of the market value of properties and be levied on people with multiple homes or oversize houses," the source said.

"The property tax can be considered a new measure to adjust the demand and supply chain, and so curb property speculation and squeeze the housing bubble," said Chen Guoqiang, head of the Peking University Real Estate Institute.

"Furthermore, it is a key step to realize the tax reform, as the property tax will benefit local governments' revenue, which has depended on land sales for years."

The newspaper did not reveal when, and in which cities, the tax will be levied. Earlier reports said Shanghai and Chongqing are being considered as trial locations.

Since 2009, the central government has launched a series of measures to put a brake on the soaring property prices, such as higher interest rates and lending curbs, and last year, China suspended mortgages for third-home purchases. The country's central bank also raised borrowing costs for a second time. However, house prices continued to pick up during the New Year holiday period, inviting the government to roll out fresh measures to deflate the real estate market.

Analysts said that a total of 207 billion yuan (US$31.4 billion) worth of residential properties were traded in Shanghai in 2010 - an average of 2.6 million yuan per unit - despite the central government's efforts to cool the housing market.

Premier Wen Jiabao last month voiced the government's determination to pull prices back to a reasonable level.

"Given such rigorous terms, property prices will definitely drop as the demand will largely shrink, especially in the high-end sector. The pre-owned home market, however, will be more active as multiple home owners may choose to sell some of their apartments," said Qin Xiaomei, chief researcher with property consultancy Jones Lang LaSalle Beijing.

(China Daily January 5, 2011)