Chinese investment in US homes contracts by the most in nearly 10 years as trade war, capital controls bite
A prospective buyer browses property listings in New York.
Chinese buyers pulled away from the US residential market in the past year, as the trade war and tighter capital controls led to a 56 percent decline in investment – the biggest contraction since at least 2010, according to the US National Association of Realtors.
Still, their investment of US$13.4 billion in the 12 months to March 2019 was the largest – 11 percent – among all foreign buyers for the seventh straight year. But China’s 56 percent retreat was much sharper than the 36 percent decline in overall foreign purchases. Chinese investment in absolute terms fell to its lowest level since 2014.
“A confluence of factors – slower economic growth abroad, tighter capital controls in China, a stronger US dollar and a low inventory of homes for sale – contributed to the pullback of foreign buyers,” said Lawrence Yun, chief economist of the association.
Other observers said that a near 6 percent appreciation in the US dollar and a backlog of applicants for a key investment visa program also affected sentiment.
“The data from our platform showed that in the first quarter Chinese buyers’ inquiries for US property was down 27.5 percent from a year earlier, the fourth time it had fallen in the last five quarters,” said Carrie Law, CEO, and director of Juwai.com, a website connecting Chinese buyers to overseas properties. “Trump is responsible for a big part of the drop in Chinese interest. His aggressive rhetoric and his visa restrictions and the trade war has scared some potential buyers, and not just from China.”
Becco Zou, a property agent with Caliber Real Estate in Bellevue, near Seattle, said she felt the demand from mainland buyers had significantly weakened since late last year, and these buyers reported substantially more difficulties in transferring money out of China.
“I have many domestic clients so I didn’t feel the impact much. But those realtors who mainly rely on Chinese customers suffered a drop in business,” Zou said, adding Seattle’s property market remains robust because of strong local demand from tech talent arriving in the city.
She said that some wealthy Chinese were even divesting their US properties as they were losing hope in attaining green cards through the EB-5 investment visa programme, noting that sales of luxury houses, town houses and condominiums, favoured by foreign buyers, were taking longer.
Juwai’s Law said that without Chinese capital controls and the Trump effect, there would be an avalanche of Chinese investment in US real estate, similar to 2015-16.
According to the survey, foreign buyers tended to buy more expensive homes, with a median purchase price of US$280,600 compared to US$259,600 for local buyers. The median price of the Chinese purchases was still higher at US$549,000.
Property services firm Uoolu said that the UK, Australia, Japan and Southeast Asian nations of Vietnam and the Philippines were the main beneficiaries of Chinese buyers’ shift away from the US.
Japan led the surge with a 160.5 percent jump in inquiries in the first half, followed by 64.8 percent for Vietnam.
- New York
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