Yet within those overall figures, there are huge variations. According to Zhang Shuxiao, an estate agent at 21st Century in Xian, a large industrial city in central China: “There is no bubble here like there is in Shanghai or Beijing. The market is very stable without any significant increases or price drops.” However, in Chengdu, in south-western China, big problems are developing. “Prices have dropped 20 per cent in the last year, especially for new apartments,” says Li Qian at Shunchi Real Estate Agency in the city. “It could take two or three years before they come back.” Similar stories of plunging prices are beginning to appear in a number of big cities. Meanwhile, several other indicators point to a slowing property market. Sales have declined and floor area under construction fell in August, while production of steel, cement and air conditioners was flat or down in the month – another sign of weak activity. Analysts say that mortgage approvals have also dropped sharply in recent months. “We believe the likelihood of a property sector meltdown in China is high,” says Jerry Lou, an analyst at Morgan Stanley in Shanghai.

Most economists believe that there is a lower chance of widespread defaults on mortgages in China than in many countries because Chinese housebuyers pay relatively large deposits. “Chinese families will do everything to avoid losing a house,” says one Beijing-based economist. Others point to signs that underlying demand is still strong. In the past fortnight, there have been a number of cases of property developers generating huge interest from buyers after they offered generous discounts on new apartments.

But if the property market does suffer a nasty accident over the next year, the banking sector will feel the pain. Indeed, while few people are predicting growth in gross domestic product much below 8 per cent next year, a worst-case scenario that would cause an even sharper slowdown would be for property woes to cause a collapse in private sector investment.