Shanghai, China’s financial centre, is preparing this year to  impose a property tax to curb speculation in the real estate sector, amid signs of concerns by the country’s authorities to cool the red-hot economy and avoid inflation, Bloomberg reported.

Mayor Han Zheng announced the move in a speech to the Municipal People’s Congress at the weekend but did not elaborate on details. Shanghai and southwestern Chongqing are the two cities that will begin trials of a property tax, according to a 10 January report by Nomura Holdings, which expects China to selectively introduce a tax rate of about 0.8 per cent, the report said.

The surge in asset prices in mainland China and Hong Kong have helped propel growth in the number of high net worth individuals in the region, a key factor in the growth of wealth management services there.

Premier Wen Jiabao said on 26 December that measures control housing costs weren’t well implemented and that he would introduce more policies to crack down on speculation. China has tightened rules on down payments, suspended mortgages for third homes last year.