by Calculated Risk on 8/04/2010 10:26:00 PM

From Bloomberg: China Said to Test Banks for 60% Home-Price Drop

Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively ... Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.

At least they are realize prices can fall sharply. In some European countries the regulators assumed steady prices was a worst-case economic scenario!