The Chinese Academy of Social Sciences (CASS) released a new report Tuesday, predicting a slowdown in housing price hikes beginning in the fourth quarter and apartment price drops of up to 20 percent next year, Guangzhou Daily reports.

As a result of a series of property market regulations and the first increase in interest rates over the past three years, many real estate market players believe that housing prices will undoubtedly fall.

The CASS report said the entire property market would be less financed and oversupplied since the CPI fell after hitting a peak in September.

In terms of home financing, the report said the increase rate of the monthly yuan-dominated loans would fall by 20 percent, while off-balance-sheet loans would be not available to developers. Based on this information, the report indicated shrinking home financing falling to 20 percent next quarter from 40 percent in 2007.

The report also said domestic inflation fluctuation would generally be in line with housing prices and rebound in the second quarter of 2011.

It also said regulations on housing prices would be relaxed when home prices dropped by 20 percent. Zhang Ming, Deputy Director of the Global Finance Center at CASS, said the central government would not keep housing prices at such low levels for too long because property played an important role in China's economy. A plunge in housing and land prices would impact the performance of commercial banks and mean less money for public investment, especially for indemnificatory housing.

(Xinhua News Agency October 23, 2010)