China's great real-estate bust has begun, says Nomura.

A combination of a huge oversupply of housing and a shortage of developer financing is producing a housing market downturn that could drive China's GDP to less than 6% this year.

"To us, it is no longer a question of 'if' but rather 'how severe' the property market correction will be," three Nomura analysts wrote in a report released Monday. And there isn't much the government can do to head off problems. "There is no policy that is universally right," says Nomura analyst Zhiwei Zhang.

For some time, Nomura has been among the most bearish of the big investment houses when it comes to China. And it has made some gutsy calls, although they haven't always turned out to be right. In early April, for instance, Nomura forecast that China's current account—the widest measure of trade—would be in the red in the first quarter of 2014. When the numbers came in recently, China still had a current account surplus, though at $7 billion, it was the smallest quarterly surplus in three years.

So it remains to be seen whether Nomura this time will be Paul Revere warning of trouble ahead or Chicken Little, warning of trouble that never seems to occur.