The Chinese Academy of Social Sciences (CASS) Monday issued a report on the outlook of Chinese housing market for this year and the next.  The report said Beijing's housing price is 26% above its fair market value.  Overall, the report expected China's housing prices to drop slightly in the 4th quarter of this year.

The report estimated that Beijing's housing price bubble has surpassed other big cities like Shanghai, Guangzhou, and Shenzhen.  Because of the bubble, the housing affordability in Beijing is the lowest among all the 35 cities the report covered.

For the national housing market, the report said the recent price hikes and reduced lending would result in the falling prices and sluggish volume in the fourth quarter, but investments in the real estate market will keep growing. 

October saw property prices in 70 medium and large cities rise 3.9 percent from a year earlier and 0.7 percent from September, according to data from the National Bureau of Statistics last week.

New home prices climbed 0.9 percent in October from September, 0.1 percentage points higher than the growth rate in September. However, growth rate of second-hand house prices eased in October. Second home prices rose 0.4 percent month-on-month in October, but the growth rate was 0.1 percentage points down from that in September.

The report forecast that property prices would stabilize in the first quarter of 2010, rise on expectations of inflation in the second quarter, and stabilize or slightly dip in the third and fourth quarters.