Are Chinese buyers less interested in American homes?
Are Chinese buyers less interested in American homes?
China’s central bank continues to frown on capital flight
US residential property sales to Chinese buyers have fallen for the first time since 2011.
In a seeming nod to the effectiveness of China’s clampdown on capital outflows, Chinese buyers were found to have bought 29,195 units or USD27.3 billion in stateside homes in the year from March 2015 to 2016, compared with 34,327 units or USD28.6 billion in the previous 12 months, according to a report by the National Association of Realtors.
“The residential-property market here, especially for those priced between USD2.5 million to USD3 million, has been affected by China’s measures to control capital flight,” David Wong, a broker with New York City’s Keller Williams Realty Landmark, told SFGate. “You need to cut the price, or it may take a real long time.”
China’s central bank has renewed a clampdown on cross-border investment after the yuan depreciated to a five-year low against the greenback in June.
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Despite China’s capital flow control measures, Chinese buyers still commanded a 26.7 percent share of sales to international buyers (in terms of US dollar value), the report showed. This makes Chinese nationals the biggest class of international buyers overall, above Canadians who came in second with USD8.9 billion in purchases or an 8.7 percent share.
With restrictive access to mortgages in US banks, 71 percent of Chinese buyers paid for US property in cold cash.
The report also showed that the average purchase price by Chinese buyers amounted to USD936,615, while international buyers coughed up USD477,462 on average. Lawrence Yun, chief economist for the National Association of Realtors, believes this indicates that wealthy Chinese buyers are still able to skirt capital control measures.
Chinese purchases also tend to be in central cities and suburban areas with relatively higher property prices such as Washington and New York. About a third of Chinese buyers purchased homes in California.
“The Chinese view is that US property buying is more than investment, but some kind of safe-haven,” Yun told SFGate. “It is a much safer diversification than just keeping everything in China.”
Read next: Do Asian investors still want to be top of the heap in NYC?
Source: Property Report