DUBLIN - THE collapse of the housing bubble in the US is mutating into a global phenomenon, with real estate prices swooning from the Irish countryside and the Spanish coast to Baltic seaports and even parts of northern India.

This synchronised global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes but jobs as well.

In Ireland, Spain, Britain and elsewhere, housing markets that soared over the past decade are falling back to earth.

Property analysts predict that some countries will face an even more wrenching adjustment than the United States, including the possibility that the downturn could become a wholesale collapse.

To some extent, the world's problems are a result of American contagion.

As home financing and credit tightens in response to the crisis that began in the sub-prime mortgage market, analysts worry that other countries could suffer the mortgage defaults and foreclosures that have afflicted California, Florida and other American states.

Citing the reverberations of the US housing bust and credit squeeze, the International Monetary Fund last Wednesday cut its forecast for global economic growth this year and warned that the malaise could extend into next year.

'The problems in the US are being transmitted to Europe,' said Mr Michael Ball, professor of urban and property economics at the University of Reading in Britain who studies housing prices.

'What is happening now is an awful lot more grief than we expected,' he said.

For countries like Ireland, where prices were even more inflated than in the US, it has been a painful education as home owners learn the American vocabulary of misery.

'We know we are already in negative equity,' said Ms Emma Linnane, a 31-year-old university administrator.

She bought a cosy one-bedroom apartment in the Dublin suburbs with her fiance, Mr Paul Colgan, in May 2006 at the peak of the market.

They paid US$575,000 (S$780,000) - at least US$100,000 more than it would fetch today. 'I sometimes get shivers thinking about it,' Ms Linnane said. 'But I will let the reality hit me when I go to sell it.'

That reality is spreading.

Once-sizzling housing markets in eastern Europe and the Baltic states are cooling rapidly as nervous western Europeans stop buying investment properties in Warsaw, Tallinn, Estonia and other real estate Klondikes.

Further east, in India and southern China, prices are no longer surging.

With stock markets down sharply after reaching heady levels, people do not have as much cash to buy property.

With low interest rates helping to inflate housing bubbles in many countries, economists said the confluence of falling prices was predictable, if unsettling.

This is not the first housing downturn to cross borders, but its reverberations have been amplified by the integration of financial markets.

When faulty American mortgages end up on the books of European banks, the problems of the US aggravate the world's problems.

Consider Britain, which had one of Europe's most robust housing markets, with less of an oversupply than in Ireland or Spain. Then last summer came the sub-prime crisis across the Atlantic.

Within two months, mortgage approvals dropped 31 per cent, compared with the previous year. And in March, average housing prices had fallen 2.5 per cent, the largest monthly decline since 1992.

'The boom in house prices was actually much bigger here than in the US,' said Mr Kelvin Davidson, an economist at Capital Economics in London.

'If anything, people should be more worried than in the US.'

NEW YORK TIMES

Is this article useful to you?