Fears of knock-on effects as housing demand slumps

Property has been one of the pillars of China's boom. Not only does real estate account for about a quarter of all investment, but there have been huge spillovers into the rest of the economy. Hundreds of millions of Chinese bought their first home over the past decade, sparking spending on televisions, washing machines and air conditioners.

Yet it is property that has also led to the current uncertainty. Housing markets in southern China started to weaken at the beginning of the year and the process has spread. There have been periodic bubbles in house prices in individual cities or provinces but, for the first time since private property markets took off a decade ago, prices are falling.

Housing indicators suggest that demand has slumped. In the first nine months of the year, the amount of residential floorspace sold fell by nearly 16 per cent. Vanke, China's largest property developer, says that in October its sales were down 35 per cent compared with the same month last year.

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