Chinese Property Slump Extends Into September

China’s giant housing market slowed substantially in September, official data showed, as the country’s debt-saddled developers cut spending and demand from home buyers waned.

Monday’s data builds on recent reports from individual real-estate companies showing punishing drops in sales. It also underscores how property-market weakness, already evident in lackluster August figures, hasn’t abated as the industry enters what is traditionally a much stronger period for home sales.

Investments made by property developers fell 3.5% in September compared with last year, according to data released by China’s National Bureau of Statistics on Monday. It was the first time property investment had fallen year-over-year after growing quickly since the beginning of the coronavirus pandemic.

Home sales by value fell 16.9% in September from a year earlier, while the floor area of new construction projects that were started in the month fell 13.5%. Both measures had already dropped sharply year-over-year in August, falling 19.7% and 17%, respectively.

The data paint a bleak picture for China’s property market and the many developers that had banked on strong housing sales to help pay off large amounts of borrowings. Global investors have turned bearish on the prospects of Chinese real-estate developers, sending their dollar bond prices to deeply distressed levels. The yield on an ICE BofA index of high-yield bonds from Chinese companies climbed above 23% last week, its highest in more than a decade.

“It’s become a lot harder for developers to access financing…at affordable rates, so that’s probably going to result in a further pullback in housing starts going forward,” said Julian Evans-Pritchard, senior China economist at Capital Economics. “I think policy makers are willing to take measures to support housing demand but they’re less willing to take measures to support developer-borrowing.”

A string of property developers—starting with industry giant China Evergrande Group—have missed payments on their dollar bonds over the past month, and defaults are rising.

Late last week, a smaller developer, China Properties Group Ltd., said it had defaulted on $226 million in three-year notes that matured on Oct. 15. A few days earlier, Sinic Holdings, another Hong Kong-listed Chinese developer, warned it was likely to default on bonds that mature on Oct. 18, after earlier falling behind on some other obligations.

Overall, data showed Monday that China’s economy grew 4.9% in the third quarter from a year earlier, slowing sharply from the previous quarter’s 7.9% growth rate, as power shortages and supply-chain problems added to the impact from Beijing’s efforts to rein in the real estate and technology sectors.

“Today’s set of data reconfirmed our view that the property slowdown is one of the main drivers of the current China economic slowdown, on the back of financial tightening and property tightening,” said Mo Ji, chief China economist at Fidelity International.

“Chinese policy makers are striking a delicate balance between growth goals and reform goals,” she said, describing the country’s housing costs as the government’s biggest challenge, next to those of education and healthcare, in its drive to reduce income inequality.

Former Google CEO Eric Schmidt is selling his Northern California estate, which was listed Monday for $24.5 million.

Located in Atherton, an extremely affluent town northwest of Palo Alto and about 30 miles south of San Francisco, the 3.36-acre property is made up of three parcels that Schmidt acquired over the years, according to public records and Compass, who has the listing.

Schmidt, 69, and his wife, businesswoman Wendy Schmidt, purchased the main home in 1990 for $2 million, according to public records accessed via PropertyShark. They remodelled the 1969 home in 2007, and at that time, bought a neighbouring parcel of land, allowing an expansion of the main house and the addition of a guest house, according to Compass, who holds the listing. A third parcel was later acquired, on which the Schmidts added an English garden house and landscaped grounds overlooking the Eastern Hills.

“Finding three contiguous parcels in Atherton is rare. Even rarer are those with views of the Eastern hills,” said listing agent Katharine Carroll of the reSolve Group at Compass. “The location of this residence is ultra private, at the back of a cul-de-sac with the main house built into a hillside that provides privacy and very good security.”

Across the estate, there are five bedrooms, five full bathrooms and six half bathrooms.

The 5,265-square-foot main house also offers a number of private outdoor spaces on its upper level, including a large terrace off the primary suite, another large terrace off a secondary bedroom, plus a third smaller terrace and two balconies.

Behind the main house is a patio with a pool and spa. For even more outdoor space, there’s an entertaining pavilion, an open lawn and an outdoor fireplace area near the guest quarters.

The grounds themselves are also a standout feature, with an array of mature plants and specimen trees. The upper portion of the property’s landscaping is designed around an Amdega-designed conservatory, which was imported from the U.K. Around the greenhouse, there is a garden of raised beds and fruit trees, Carroll said.

“From the moment you step onto the grounds, it feels as if you’ve been transported to a private botanical sanctuary,” she said.

Schmidt served as Google’s CEO from 2001 to 2011, and then became the company’s executive chairman until 2015. He could not be reached for comment.

This article first appeared on Mansion Global

Chinese Property Slump Extends Into September

Debt-saddled developers in China cut spending and demand from home buyers slowed.