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This report gave a comprehensive and systematic analysis, prediction and assessment of China’s housing market, and put forward the policy proposals from five aspects: macroscopic background, market players, market system, public policy and topic of the year.

The 2012-2013 analysis reveals that: global housing prices rose, particularly in emerging economies; China’s housing market grew rapidly; endogenous retrench slowed growth rate and the economy tended to be stable after sufficient adjustment; weak demand restrained the inflation and food price together with house renting price pushed up the general price level; industrial concentration was further enhanced and the number of firms started to decrease after growing; the operating range for housing firms were generally wide and some centrally controlled enterprises were still involved in the real estate market; local governments implemented “the five national real estate regulations” but most key cities can hardly achieve the regulatory objectives; owner-occupied demand entered the market in a panic with housing prices pushed up dramatically for metropolis but small and medium cities showed stagflation; rentals kept growing rapidly and renting pressure increased significantly; the land market continued to rebound, planned supply, actual supply and trading volume increased dramatically on a year-on-year basis, residential land price rose notably; real estate development loans rose significantly, individual mortgage loans kept running at high levels; various channels of fund raising ensured the smooth implementation of affordable housing policies, renovation of shantytowns was included as a core objective of housing security; house sales quota policy continued to be implemented strictly and housing market regulations entered a stable and smooth transition phase; differentiation taxation policy was stable and continuous, property tax reform is imminent; immigrant population as a percent age of urban population might be over 30%, and the situation for most of them leaves much to be devised.

For 2013-2014 we forecast that: global economic growth rate will be low with slowing inflation, stable interest rate and slumping trade; global housing market is expected to growth continuously at lower speed; cyclical, structural and periodic characteristics of China’s economy will be more significant, moderate growth will be the norm; “steady growth” policy will remain basically unchanged but the effectiveness of regulatory policies will be weakened; real estate industry will concentrate further and companies will focus more on competition in branding; housing firms fundraising via a variety of approaches and proportion of direct financing will continue to increase; housing price of metropolis may peak and in small and medium cities declining tendency will be sustained; rents will increase by momentum with large seasonal variations; land trading volume may rise further with higher and stable prices; there could be land shortage for first-tier and key second-tier cities, so land price tends to increase continuously while remaining stable for the majority of second-tier and third-tier cities.

The main problems and challenges for the balanced development of China’s housing market are: excess production capacity is still very serious in some industries and there are potential local financial risks; housing firms operate irregularly with problems such as window dressing, rent-seeking, etc; big housing firms invest and finance abroad over-aggressively and face huge risks; mortgage still accounts for a big proportion of loans provided by financial institutions, credit risk still exists; differentiated mortgage is difficult to implement and financial institution for affordable housing absent; financial risks for local government accumulate and conflicts are intensified in the land acquiring process; administrative controls distort the market and imbalance between supply and demand exists in the long-term; housing price soar together with rents and income gap between house-renting families and house-owning families expands; house renting families cannot enjoy the same rights as the home owners and rental agent market is chaotic; oligopoly in the land market becomes more severe and land price is forced to increase; housing financing overly concentrates on indirect financing market and strong performance of housing credit market puts pressures on regulatory policies; supervision on idle land is inadequate and construction quality control should be strengthened; affordable housing system is unclearly layered and the affordable housing qualification mechanism is incomplete and there are loopholes in the file management; affordable housing allocation system is incomplete as well, housing provident fund has inadequate coverage and loopholes; accountability mechanism remains unfulfilled and long-term housing regulating mechanism is yet to be established.

Therefore, the report recommends: maintain appropriate scale of government-led investment and moderate monetary policy; improve the legal and political system, regulate operational behavior of housing businesses; establish the appropriate environment for cooperative housing financial institutions and explore to build effective supporting systems for financing of affordable houses; reconstruct central-local government fiscal system; optimize the performance evaluation systems; weaken administrative control, deepen economic reform; improve the housing rental market, guarantee the legitimate rights of tenants; increase land supply appropriately in first and second-tier cities while reducing it in third and fourth-tier cities; expand the direct housing financing effectively and prevent and control financial risks by securitization technologies; housing regulation should be sustainable and have comprehensive coverage, should not blow hot and cold nor just emphasize buyers while neglecting tenants; build up affordable housing file management system, complete housing provident fund system; reconstruct “basic, moderate and content” housing supply system, establish long-term housing regulatory system as soon as possible; reform current land and housing market institutions, use multiple approaches to enhance housing affordability for migrant population.