But although once-sizzling housing markets in Eastern Europe are cooling rapidly, as nervous West Europeans stop buying investment properties in Warsaw, Estonia and other former real estate Klondikes, those investing in Asia and the Far East are actually benefiting.
Although in India and southern China prices are no longer climbing, stock markets are down sharply after reaching heady levels, and people do not have as much cash to plow into property, the global downturn is likely to have a more limited effect.
'If the Fed moves rates, and the People's Bank of China follows, it doesn't mean much to a peasant in China,' said Thomas Mayer, the chief European economist at Deutsche Bank in London. 'But it means a lot for the newly rich entrepreneur in Shanghai, who can load up on credit and buy a fancy apartment.'
This is not the first housing downturn to cross borders, Mayer said, but its reverberations have been amplified by financial markets. When faulty U.S. mortgages ended up on the books of banks around the world, the problems of the United States aggravated global problems.
'The problems in the U.S. are being transmitted to Europe,' said Michael Ball, professor of urban and property economics at the University of Reading in England, who studies housing prices. 'What's happening now is an awful lot more grief than we expected.'
Still, the problems in Britain pale next to those of Spain and Ireland. Residential investment accounts for 12 percent of the Irish economy and 9 percent of the Spanish economy, compared with 5 percent in Britain and 4 percent in the United States, according to the International Monetary Fund.
But there is optimism even in the gloomy depths of Spanish real estate. Enric Bueno, head of marketing for Ibusa, a real estate company in Barcelona, said his company was closing six or seven sales a month, compared with 40 a year ago. 'Things are really bad,' Bueno said. 'If this goes on for five years, we won't make it. If it lasts for two, we will.'
