CHINA’S PROPERTY BUBBLE

THE GREAT PROPERTY BUBBLE OF CHINA MAY BE POPPING

After years of housing prices gone wild, China's property bubble is starting to deflate.

Bob Davis (The Wall Street Journal)

The Australian, June 9, 2011

Residential prices are heading downward in some major cities, damping some undesired real-estate speculation but raising the prospect that the Chinese economy may slow more rapidly than anticipated with profound consequences for global growth.

Real estate is a foundation of China's phenomenal growth record in the past two decades, and its health is crucial to China's construction, steel and cement sectors.

Real estate is also a favoured investment of Chinese looking to get better returns than bank deposits pay.

Local municipalities and provinces depend on rising prices for land sales as well to fund infrastructure projects.

World Bank economists warned at a Beijing press briefing that a real-estate bubble was among the biggest economic risks China faces.

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