China will allow cities to set their own property taxes instead of requiring them to conform to one tax regime, a senior lawmaker said.

China's residential property market is deeply segmented and polarised, with prices many times higher in so-called tier-one cities such as Beijing and Shanghai compared with markets in hinterland cities. The huge price variations make it hard to create one tax regime that can apply to all markets.

Allowing local governments to decide their own property tax rates will also minimise their potential impact on housing prices, said Yin Zhongqing, deputy director of the financial and economic affairs committee at the National People's Congress.