The State Council, China's cabinet, approved the trial but said the tax levy method would be decided by the governments of the provinces where the cities are located, the official Xinhua news agency said. It gave no more details.

A statement posted on the finance ministry's website said the tax would help "adjust income distribution and promote social equality."

"People's living standards have hugely improved, but the income gap is also widening.... Property tax is one important method to adjust income and wealth distribution, and levying property taxes helps reduce the wealth gap," it said.

It added the tax would help "rational" home-buying.

The trial is the latest in a range of measures taken by the government to curb spiralling property prices, as polls have shown the difficulty in affording housing has become the top consumer fear.

On Wednesday, the government raised the minimum down payment for second homes to 60 percent of the property's value and ordered authorities to rein in real estate prices.

The central bank has also raised interest rates twice since October, and has increased the amount of money banks must keep in reserve in a bid to curb lending.

But despite these policies, property prices in China's major cities have continued to increase, posting their fourth straight month-on-month rise in December as sales picked up pace.

The statement did not mention which cities would trial the tax, but Xinhua said Shanghai was one of them and had already set the tax rate at 0.4 to 0.6%. The southwestern municipality of Chongqing is also one of the trial locations.

According to a report on popular web portal sina.com, authorities in Chongqing have set the tax rate at between 0.5 and 1.2%.

Chongqing mayor Huang Qifan estimates revenue from the tax will reach 200 million yuan ($30.4 million) and will be used to build public housing, the report said.

The finance ministry said that if conditions were right, the property tax would be expanded to the rest of the country.

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