Chinese regulators have implemented strict rules to restrain the debt levels of property developers.
Around the same time, the world's second largest economy is seeing a bit of a slowdown in the price growth of new homes.
Here's an excerpt from an Oct. 20 Reuters article:
New home prices in China grew at their slowest pace in over 4-1/2 years as tightening measures in some big cities helped cool the property market despite a broader economic recovery.
New home prices in China also grew at a slightly slower monthly pace in September, official data showed on Tuesday, while the number of cities reporting monthly price increases for new homes fell....
"The broad tightening of housing policies since July has had an impact on home prices data," said... a Beijing-based analyst with property agency Centaline....
On an annual basis, home prices rose 4.6% in September, the slowest pace since February 2016, and versus a 4.8% expansion in August.
Relatedly, the October Elliott Wave Financial Forecast, a monthly publication which provides analysis of major U.S. financial markets (and global markets, at times), showed this chart and said:
China Evergrande Group, China's largest homebuilder, announced that it will slash new home prices 30% in all its projects throughout the country. "... The price cut is supposed to be temporary, but the South China Morning Post quotes the director of a Shanghai housing research institute who says, "Evergrande's campaign signals the price war in China's housing market has started. Developers are facing huge downward pressure." As the chart of China Evergrande's share price reflects, this pressure has been building for some time.
Here's the next chart that the October Elliott Wave Financial Forecast showed, along with the commentary:
EWFF looked at China Evergrande's debt-to-equity ratio and noted that it was more than 10 times the average for a group of 10 U.S. homebuilders. We concluded, "The only answer for China--which is simultaneously a curse--is more credit." This proved true for Evergrande, as it continued to issue bonds. The chart shows the value of an Evergrande Real Estate five-year bond that came out in mid-2019 paying a 6.8% coupon.... On September 25, the bond price collapsed to just under 66 cents on the dollar before rebounding into this week. "China Evergrande Group is facing a crisis of confidence among creditors," explained Bloomberg on September 25. "Evergrande has long been viewed as a poster child for highly leveraged companies in China."