"Just a year ago, enthusiasm for housing knew few bounds, as people all around China lined up outside new housing developments for the first chance to buy. But worries grew that a bubble was developing, and the government stepped in with measures aimed at deterring speculative buyers and taking some of the froth out of housing prices. Those seemed to be working as intended -- until the global financial crisis frightened consumers and sucked away much of the optimism about China's prospects.
Housing sales, which at one point last year were rising by more than 50% from a year earlier, softened early this year, and are now plunging. Floor space sold dropped 36% in August. Average nationwide housing prices have fallen month-on-month in both August and September, and growth in new construction is slowing sharply as developers, squeezed for cash, have to cut back.
"Now everybody believes the price will go down. And the developers don't want to sell at a lower price. Nobody wants to sell, and nobody wants to buy," says William Xin, chief financial officer of China Housing & Land Development Inc., a developer in the western city of Xi'an."