Safe as houses?

Chinese house prices are falling steeply, presenting the country's banks with a major challenge. Are their newly souped-up credit risk management capabilities ready to cope with a possible downturn in the home loan market? Kathleen Kearney reports

China's banks have been staunch allies in their attempts to help the Beijing government cool domestic property-related lending and investment in the past three years. They did this as part of efforts to prevent the formation of a large property bubble. Co-ordinated action in the form of new regulations, along with lending restrictions, had only limited success, until turmoil struck the financial markets in September. The property markets now look set for a significant downwards price correction