It will be impossible to wring speculation out of the sector without much lower prices and a significant increase in financial distress. But the longer the economy is dependent on an ever-rising property market, the higher the economic costs of reform.

China has little choice: it needs to transition from an investment to consumption-driven economy, even if doing so will be painful. Since boosting consumption until it surpasses investment growth is practically impossible, China will need to slow down GDP growth altogether.