"Looking forward, you have to have new construction to maintain reasonable real estate investment, so the accumulated homes will take longer to sell," said Ni Pengfei, head of the Center for City and Competitiveness at the CASS. "But there are solutions. If 70 percent of migrant workers bought homes in the cities they work in, the inventory would be depleted."

The report suggested that stimulus policies this year have unleashed most of the home trade-up demand, so next year's housing sales will slow significantly. Without fresh stimulus, it warned, housing prices next year are at risk of falling precipitously.

Guo Kesha, another researcher at the CASS, said the growth in real estate financial investment has already fallen to just 2 percent from more than 20 percent two years ago, and is set to trend lower.

Policies should prioritize stabilizing investment, not inflating prices, Guo said.