Real estate prices are expected to cool in Beijing and Shanghai, and in lower-tier cities this year, a new report said.

The Blue Book of Real Estate, released on Monday by the Chinese Academy of Social Sciences said that house prices in first-tier cities are unlikely to bounce back in the short term.

The report also predicted that housing prices in Beijing will keep going down, even as new growth points emerge in cities around the capital. The rental market will become the major focus in cities such as Chongqing, Guangzhou and Nanjing.

Investment growth in property development has remained stable in 2017 at more or less the same levels as that of 2016, the report said, adding that the focus of housing policies in 2018 would be to stabilize the market.

“The curbs on personal mortgages are unlikely to be relaxed from a short-term perspective in 2018,” said Wang Yeqiang, a researcher at the Institute for Urban and Environmental Studies of the CASS.

“In the long term we need to further balance the supply and demand of land, promote the rental market and implement long-term policies to gradually replace the restrictions on personal mortgages.”

The experts said the current ways to cool down the red-hot market, including limits on the house purchases and housing loans are only suitable as a short-term solution, but are not good for the property market’s long-term healthy development.

“Although over 100 cities have implemented policies to curb personal purchases, it is not a long-term solution,” said Wang. “The nation’s real estate market is in urgent need of long-term reforms.”

According to Wang, there is still enough room for an increase in the interest rate for mortgages.

Tao Ran, a professor of economics and finance at Renmin University of China, said imposing restrictive policies on housing loans is not a sustainable way to regulate the property market.

“In some cities with large population inflows, the current way is to restrict house purchases and housing loans to freeze the property market, and this is not sustainable at all,” said Tao. “Some governments came out with measures to increase the supply of rental houses, which is totally dominated by the government and can’t solve the problem from the grassroots level.”

He suggested one way to regulate the property market is to further develop the rental sector. “The only way we can adapt is turning collectively-owned land into rental housing,” Tao suggested. “For example, if the Beijing government allows the villagers and contractors to turn the 150 villages in the city into areas with rented properties, the cost of construction will not exceed 3,000 yuan ($473) or 4,000 yuan per square meter. As a result, developers will be able to make a profit within eight years. If the people know the property will only be used for rental for at least 20 years, they will stop the speculation,” he said.