Today’s China Securities Journal carried a story that average housing prices in China’s 70 major cities jumped 6.7% on average in the first three quarters of the year, fuelled by strong demand and rising land costs. According to National Bureau of Statistics figures, growth hit 8.2% in the third quarter, up from 6.3% in the second quarter and 5.6% in the first.

The upward trend comes despite intensive government efforts to cool the market over the last couple of years, including ambiguous new rules released on September 27 raising the down-payment required for homes bought with a second mortgage.

In our featured articles section today, Amy Chueng translates a critical essay from Ye Tan, the editor-in-chief of the National Business Daily’s op-ed pages, in which he lays out reasons why the government's attempts to reign in the overheated sector are doomed to fail.

In short, he argues that the government’s fear of market mechanisms and its reliance on party diktat means its policies are doomed to failure. Ambiguities in the scope and definition of the ever-changing rules invariably lead to market-distorting rumors that may have unintended downstream effects, he says.

Worse, by neglecting nuanced market-orientated controls for the black-and-white of central control, China’s fragile investment environment could be at risk if investors begin looking to other investment channels already under strain.

Ye’s solution is simple – property taxes. Tax may be a dirty word, but at least banks, investors and home-owners know where they stand.