China's land sales may top 2 trillion yuan ($302 billion) this year as the nation tries to control rising home prices.

Analysts said that surging land sales would be detrimental to the nation's economic health and the government must work to keep them low.

The new prediction compares with 1.5 trillion yuan for last year, the People's Daily reported on Monday, without elaborating on the source of the information.

China's land sales have been increasing rapidly in recent years. In 2001-2003, they were about 910 billion yuan, accounting for about 35 percent of national fiscal revenue over that period, according to experts.

In 2009, they reached 1.5 trillion yuan, accounting for 46 percent of the national revenue for the same year. Many local governments have relied heavily on so-called "land-based finance" for their income.

"If the funds the local governments have borrowed using land as a guarantee are taken into account, the dependence would be heavier," said Ye Jianping, professor at the Land Management Department at the Renmin University of China.

Behind the rising land sales are China's surging home prices, which rose by 7.7 percent year-on-year in November in the country's 70 major cities, according to the National Bureau of Statistics.

The growth rate has been easing for seven consecutive months but the month-on-month growth was positive in November, indicating that real prices are still rising.

In many cities, the house-transaction volume has risen by more than 20 percent year-on-year during the past weeks, and home prices in some cities have hit new highs.

Many people, especially the young, have complained about the unaffordability of housing. Some have even moved to smaller cities from metropolises such as Beijing and Shenzhen.

Premier Wen Jiabao, in his latest comment on the real estate sector, vowed to constrain prices. "I'm confident that home prices will reach a reasonable level following our efforts," he said on Sunday.

Analysts said that the reliance of local governments on land sales as a source of revenue must be reduced. Otherwise, the government's efforts to control house prices will be futile.

Moreover, the ample liquidity in the market has contributed to the problem of rising home prices, analysts said.

"Policymakers must take effective measures to absorb liquidity to help ease home price rises," said Chen Gong, chief economist and chairman of Beijing-based Anbound Consulting.

China has raised the reserve requirement - the ratio of money that lenders must keep in reserve - six times this year and increased the cost of borrowing twice, with the latest interest rate hike coming over the weekend.

The People's Bank of China, the central bank, said on Monday that the country's economy is faring well, but faces challenges such as proper management of bank lending and liquidity.

"The task of preventing financial risks remains challenging," it said after its monetary policy committee meeting.