An update on the global housing bubble. "Britain's housing market showed the first signs of renewed weakness last month with an easing in demand for home loans, according to figures out yesterday. City analysts said the unexpected dip in mortgage lending suggested that property was becoming too expensive for many buyers and that activity in the market was starting to suffer as a result."

"Signs of a sharp downturn are emerging in Shanghai's once-sizzling property market with prices slumping more than 30 percent for some apartments and increasing reports of mortgage defaults. Like so many other sectors of China's super-charged economy, massive investor speculation led to a real estate boom in the nation's financial hub of 17 million people that saw prices double in the three years from mid-2002."

"Since then developers have cut prices, small real estate shops have gone bankrupt and many first time homeowners have begun feeling the squeeze on mortgages now worth more than the homes purchased."

"One example of rising home-loan defaults, Song said, was in Xianfeng district, a 40-minute drive southeast from the center of Shanghai. One hundred-meter flats there which were selling for 500,000 yuan (62,000 dollars) in the middle of last year had now dropped by more than 33 percent, according to Song. 'Most investors borrowed 350,000 yuan from the bank but due to the shrinking market and the poor location, these houses are just not worth that much any more,' said Song."

"The most common result is that investors are returning the property to the bank and waiting to see how much the bank can get for it. Unfortunately, many investors will still need to pay back loans since the houses just cannot sell for what they were bought,' Song said."

"Last year bad housing loans hit 1.55 billion yuan, up from 558 million yuan in 2004, according to official statistics. 'It's a systemic risk if you are a Shanghai bank,' warned UBS economist Jonathan Anderson."

"Yet it was not so long ago that the Shanghai housing market was so tight that prospective buyers had to queue for tickets to enter a bid for a new apartment in an unfinished block. It was usually a foul tempered affair too. People jostled as they waited for hours, sometimes days, only for many to be turned away.Those lucky enough to secure bid tickets also often found that the best units had been pre-sold to those with inside connections."

"At times even the tickets themselves became a saleable commodity but now the party of irrational exuberance is over."

"The full extent of Australia's housing downturn is becoming clear. Construction started on significantly fewer homes in the three months to December. The first concrete was poured on 35,846 new homes during the December quarter, that is almost 9,000 fewer than the recent peak in the March quarter of 2004. It is down a very sharp 7.5 per cent from the September quarter. In six out of the past seven quarters now, housing starts have been falling. Housing construction activity has fallen to its weakest point since the GST took the wind out of its sails in mid-2001."

"On a state-by-state basis, the number of housing starts fell everywhere except in the Northern Territory, where they rose 16.8 per cent. For the December quarter, starts were down by 21.1 per cent in the ACT, 13.1 per cent in Tasmania, 12.6 per cent in NSW, 12.5 per cent in Victoria, 6.8 per cent in SA, 4.5 per cent in Queensland and 3.2 per cent in WA."

"Master Builders Australia chief economist Peter Jones said if the trend continued it could create a housing shortage. 'While general confidence remains solid, uncertainty related to house prices and interest rate speculation may hold back new home buyers in the short term, with the risk of a more protracted and steeper decline in housing,' he said."