BEIJING, Dec. 8 -- China's housing prices will rise by 15 percent this year, down from 25 percent in 2009, said a government think tank Tuesday, warning of a "retaliatory price rebound" in 2011 if the government relaxed measures aimed at cooling the market.
"Although average prices of residential properties will rise more slowly this year from 2009, the price rise might rebound to 20 to 25 percent in 2011," said the 2011 Economic Blue Paper from the Chinese Academy of Social Sciences (CASS).
This was likely if the government loosened its housing price cooling measures. "So, the government must not relax its macroeconomic control over the housing market," said the paper.
Although housing price rises would slow in 2010, the increase rate would still be higher than the income growth rate, and the housing price-to-income ratio remained high, and might rise further, it said.
"To curb rising house prices, the authorities should increase land provision in accordance with the pace of urbanization, adopt taxation measures, make sure local governments have a stable, reasonable channel for collecting revenues from the property sector without pushing up housing prices," said the CASS.
It was also necessary to enable rural people to liquidate their assets so as to make urban homes affordable for them, the CASS said.