A glimmer of light in the debate over mainland property market

Nothing divides China-watchers as violently as the outlook for mainland property prices.

On one side we have those who believe that Beijing's administrative restrictions introduced back in April have successfully eliminated the market's excesses.

They point to the slight 0.1 per cent decline in prices since May as evidence that the earlier buying frenzy has cooled, and argue that the increased supply of new homes due to reach the market over the coming months will help to satisfy demand, keeping a lid on further price rises.

On the other side of the argument stand those who think the authorities' tightening measures did little to tackle the underlying stresses distorting the market. They note a rebound in sales figures last month, and contend that if Beijing really wants to tame the runaway property market it will have to raise interest rates.

Which side of the debate you agree with will depend largely on what force you believe is driving the market.

If you think property prices are propelled mainly by genuine demand from would be owner-occupiers bent on acquiring a home of their own, with a sprinkling of highly-leveraged speculators adding some froth, then you will probably side with the first view now that the authorities' action has blown away that froth.

On the other hand, if you believe that demand for properties is being driven largely by unleveraged savers buying new flats as a store of value in the absence of other secure investment opportunities then the chances are that you will agree with the second argument.