If you think this is the latest, depressing tidbit from the historic real estate bust in the United States, think again. The other former global growth engine — China — which saw its own real estate bubble expand in the last five years, has now got its own property market problems — and they're intensifying. (See pictures of Beijing's changing skyline.)
The long-running boom in the construction of new apartments and houses across urban China ended abruptly last year and is now unwinding. Deflation is evident in Beijing and Shanghai in particular, where real estate developers and brokers report prices will likely be down 15% to 20% this year. Prices in the once booming city of Shenzhen are down more than 18% from year-ago levels. Nationwide, according to a recent forecast by economists at the Chinese Academy of Social Sciences, housing prices in China may decline 10% to 15% this year, as the overall economy struggles amidst the global financial crisis. "Housing prices far surpassed the actual incomes of the general public" over the last five years says CASS economist Chen Xigang. "They are now correcting."
