In fact it is not even the end of the beginning.

Amid the clamour of a supposed sales rush in major Chinese cities, local authorities yesterday began to collect business taxes on residential houses that are sold on before they have been lived in for a minimum of two years.

The new tax is just one of the tools the Chinese authorities is using to cool down red-hot property markets. The excessive growth of house prices against local income levels has been spreading from metropolises like Shanghai to many other major cities across the country. In the first quarter of the year, average house prices in China's 35 major cities rose by 9.8 per cent over the same period of last year.

Since the government decided to resort to taxation and other measures such as putting controls on overheated investment concerning the housing market, subtle, if not substantial, changes have taken place in the property market.

The lack of comprehensive and compelling data on house prices makes any conclusion premature, but extensive media reports of some eager sellers have driven home an apparent alteration in the market mood.

Vendors' growing anxieties, especially after June 1, the day the new tax policy took effect, were understandable. Making a deal before yesterday could have saved them as much as 5.5 per cent of the price in some cities.

To a large extent, the new tax policy is aimed at speculative house purchase. Theoretically, policy-makers believe the tax will eat into the profits of speculators and discourage them.

Before it was implemented, the policy seemed to work well. The possibility of an early sale propelled a number of house-owners to put their houses on the market even at somewhat discounted prices.

This kind of practice has explained the current drop of house prices in some major cities. But the phenomenon so far does not justify too much optimism for market trends.

When the tax is actually levied, it becomes part of the costs that sellers manage to shift onto buyers if the demand remains strong.

To avoid an anticlimax following the tax levy, the government needs to accelerate other efforts to check breakneck price hikes in the property sector.

Soaring house prices are only the surface of the emerging problems. While using measures like taxation can bring about some immediate effects and slow down hikes in the short term, the authorities should tackle the underlying imbalance between supply and demand.

Long-term problems in the supply and management of land, the most expensive factor, are demanding urgent solutions.

The Chinese authorities have recently come up with a series of measures such as urging local governments to provide more economy housing for low-income groups and preventing property developers from hoarding land to manipulate supply.

However, to ensure a sound development of the increasingly important real estate industry and the national economy at large, policy-makers should move more quickly to take on long-term problems.