The southern island province of Hainan also faces property bubble concerns after the central government announced a plan this month to build the island into a top international tourist destination by 2020.

The government would curb the speculative bubbles, as well as build more welfare houses for low income families, said Luo Baoming, provincial governor at the full session of the Hainan Provincial People's Congress.

In Shanghai, home price growth saw an 87.4-percent rise in 2009, DTZ said.

The Shanghai government would further curb investment-led demand in the housing market, and build 700,000 welfare houses by 2012, said Yu Zhengsheng, secretary of the Shanghai Municipal Committee of the Communist Party of China, at the annual full session of the Shanghai Municipal People's Congress.

"Shanghai faces a tight land supply. So our residential properties should mainly benefit inhabitants, not investors," Yu said.

"Driven by high property prices, the cost of home rents has also soared," said Yin Baoxing, a deputy to the Shanghai Municipal People's Congress.

China had made several moves to stop the bubble in an early stage, including reimposing a sales tax on homes sold within five years of their purchase from this year and increasing the down payment requirement for land purchases to at least 50 percent of the total price.

The measures would crack down on speculation and lead to stable house prices, said Liu Hongyu, head of the real estate research center of Tsinghua University.

But DTZ said since it takes about a year to finish construction projects, the supply of commodity residential homes should peak in 2011 when the imbalance of demand and supply is expected to be addressed.