In order to cool down real estate speculation, China is building a database, where information about property ownership will be readily accessible.

The database will reveal when people buy several properties in some of these 40 cities. These records will show the money flow from one city to another, thus helping the authorities to supervise more closely the housing market in different areas and reduce speculation.

The information-sharing system will play a positive role in controlling property bubbles, said Gu Yunchang, vice-president of China Real Estate Association.

Taizhou city, in East China's Zhejiang province, became the first second-tier city to rein in housing speculation by restricting buying, leading other second- and third-tier cities in the province to impose further limits on purchasing properties.

The city has restricted buying of new homes by local families who own two or more apartments and has also extended the policy to non-local registered families if they can't provide residence permits or documents to prove that they have been paying social security or income tax for 12 months in the past two years.

Housing prices in Taizhou have increased greatly in recent years, because hot money from surrounding cities which had already imposed purchase limits, such as Ningbo and Shanghai, flowed to the city, increasing the property bubble.

The Ministry of Housing and Urban-Rural Development has advised other second- and third-tier cities suffering rise in home prices for similar reasons to impose limits on purchases.

More than 20 second- and third-tier cities have decided to impose purchase limits and more cities are likely to follow them. The whole process will be finished by the end of August and local governments may release their regulations in September.