Housing sales in China have dropped nearly 10% over last year, and construction starts are down nearly 25%, despite nationwide easing of government restrictions on home buying and lending. The sluggish sector has left many wondering if China’s real estate market slowdown will end with a crash.

“I think that the property crash is underway,” said Anne Stevenson-Yang, research director at J-Capital in Beijing. “Once you lose the consumer’s confidence that there’s going to be price appreciation, then you can’t recover it.”

Stevenson-Yang’s team recently surveyed hundreds of properties in 44 cities throughout China. They found discounts as high as 40% on properties in all but one of those cities. In twelve of the cities they surveyed, developers were offering to finance or forgive down-payments on homes to get around a rule requiring buyers to put 30% down on a home purchase.

“So now the developers in these cities will basically write a contract that says ‘this guy already paid me 30%,’ and then give that to the bank in order to induce it to lend, when really they haven’t paid it at all,” said Stevenson-Yang.

In a country where many people buy property more as an investment rather than a place to live, economists say the threat of a property crash will mean a downturn in China’s consumer spending and will have a ripple effect throughout the world’s second-largest economy.