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Wednesday, August 04, 2010

China's Stress Tests: 60% Decline in House Prices

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!