The dramatic trend of rising housing prices had been curbed preliminarily, says the Annual Report on the Development of the Housing Market in China (2010-2011), released by the Chinese Academy of Social Sciences. [Photo / China Daily]

BEIJING - China's housing market is expected to achieve a soft landing due to effects that emerged from the government's strict limits on property purchases, according to a report from a think tank released on Friday.

The Annual Report on the Development of the Housing Market in China (2010-2011), released by the Chinese Academy of Social Sciences, said the dramatic trend of rising housing prices had been curbed preliminarily, with declines in both housing prices and sales.

Consolidation of the measures means that China will maintain a generally strict housing policy, while minor adjustments are expected to be made in some areas to "meet certain conditions" and realize a soft landing for the housing market, the report said.

In October, 34 of a statistical pool of 70 major cities saw a decline in new-home prices from September, compared with 17 in September, according to data from the National Bureau of Statistics.

Generally, the decline in both prices and sales will continue from 2011 into 2012, the report said.

Housing prices in China have tended to be reasonable, with flat prices in first-tier cities such as Beijing and Shanghai during the past year. Meanwhile, prices in small and medium-sized cities - which experienced sharp increases between the end of 2010 and the second quarter of this year - have begun to fall.

After developing in a "golden age" over a period of more than 10 years, China's housing market has experienced an unprecedented shock, according to the report.

It said that the "double decline" will lead to capital tightening among real estate developers and a slowing of further investment that may compel developers to recycle funds by selling stored houses at lower prices.

To "digest" the stored houses and expand sales volumes, a wave of promotions and price-cutting is expected in the housing market.

The cost of renting a house has recently soared nationwide. Between January and June, the housing rental index rose by 4 percent, and has increased a further 1 percent since the beginning of the third quarter.

Tenants, especially recent graduates, face significant pressure, said the report.

The government's purchasing restrictions provided an excuse for owners to raise rents. Meanwhile, rentals have risen because potential buyers are waiting to see consistency and stability in State policy.

When the government works out regulations and control policies, it will guarantee the stability and durability of its policies, the report said.

Xinhua