Sales fall

Chi­nese slow home­buy­ing in US due to weaker yuan, reg­u­la­tions

China Daily (USA) - - FRONT PAGE - By ZHU WENQIAN zhuwen­qian@chi­nadaily.com.cn

For the sec­ond con­sec­u­tive fis­cal year to March-end, Chi­nese home­buy­ers were the largest over­seas in­vestors in the United States realty sec­tor. But their col­lec­tive in­vest­ment fell. Yet, prop­erty agen­cies are bullish on the pur­chas­ing power of the Chi­nese mid­dle class.

In 2015-16, Chi­nese home­buy­ers spent $27.3 bil­lion, down 4.5 per­cent from $28.6 bil­lion of 2014-15, ac­cord­ing to a re­port of the US-based Na­tional As­so­ci­a­tion of Real­tors.

This is the first fall since 2011. The num­ber of prop­er­ties sold to Chi­nese buy­ers also dropped, the re­port said.

In March, the me­dian price of pre-owned homes in the US edged up 6 per­cent year-onyear, ac­cord­ing to the re­port. The price-rise is more ev­i­dent in Cal­i­for­nia and New York, the key states where Chi­nese buy­ers like to buy homes.

On top of that, the yuan has been weak­en­ing against the dol­lar since last year, mak­ing US prop­er­ties even more dearer to Chi­nese buy­ers.

Ex­perts have iden­ti­fied some crit­i­cal fac­tors that have been weigh­ing on the minds of Chi­nese buy­ers of US prop­er­ties.

The quo­tas for in­vest­ment re­lated im­mi­gra­tion have reached their limit. So, in­vestors have to wait un­til new quo­tas take ef­fect, to ap­ply for US green cards. But, the cards would not ma­te­ri­al­ize quickly.

In ad­di­tion, the Chi­nese gov­ern­ment’s stricter cap­i­tal con­trols since last year kept the up­per limit for each Chi­nese at $50,000 a year.

If a fam­ily uses sev­eral bank ac­counts to ex­change dol­lars and re­mit money abroad to a sin­gle over­seas ac­count, that ac­count would

Mau­reen Yeo, direc­tor of Bei­jing­based MX Con­sult­ing

be li­able to be frozen. With most Chi­nese home­buy­ers pay­ing in cash, the pol­icy had an im­pact on the buy­ing trend.

Mau­reen Yeo, direc­tor of MX Con­sult­ing, a Bei­jing­based prop­erty con­sult­ing agency, said: “Most homes mid­dle-class buy­ers look at are prop­er­ties priced around $200,000. Buy­ers can fin­ish the pay­ments within two years. We still have a lot of buy­ers con­sult­ing and clinch­ing deals, and we see a promis­ing growth po­ten­tial.

“Some buy­ers were cheated in cer­tain in­vest­ment-re­lated im­mi­gra­tion cases, and now in­vestors have be­come more cau­tious than be­fore. Be­sides, the de­pre­ci­a­tion of yuan had some im­pact on buy­ers, but many peo­ple are wor­ried that the yuan will con­tinue to de­pre­ci­ate, so they con­sider it’s wise to buy prop­er­ties in the US sooner than later.”

Ac­cord­ing to real es­tate agen­cies, US prop­er­ties resold by Chi­nese buy­ers de­clined in re­cent years. Most of the mid­dle-class Chi­nese home­buy­ers in the US use the prop­er­ties to en­able their chil­dren pur­sue ed­u­ca­tion, and re­sell them when the tim­ing is right.

Fan Ya­jing, 26, cur­rently works in a New York of­fice. Her par­ents bought a house in Salt Lake City when she used to pur­sue her un­der­grad­u­ate course there. Upon grad­u­a­tion, she lived there for a while and then sub­let the rooms to her friends.

“I’m still sub­let­ting the rooms to my friends. I’m not liv­ing there now. My par­ents bought the house for in­vest­ment, and not for long-term liv­ing.”

In the first five months of this year, Chi­nese in­vestors pumped $17 bil­lion, or 65.6 per­cent of last year’s to­tal, into the prop­erty mar­ket glob­ally, sec­ond only to Amer­i­cans who in­vested $19 bil­lion.

Last year, to­tal Chi­nese over­seas in­vest­ment in prop­erty was 25.7 bil­lion yuan, ac­cord­ing to com­mer­cial real es­tate ser­vices com­pany Cush­man & Wake­field.

Most homes mid­dle-class buy­ers look at are prop­er­ties priced around $200,000.”

JES­SICA BRANDI LIFLAND / FOR CHINA DAILY

A real es­tate bro­ker (right) shows a prospec­tive home­buyer a plush kitchen in a $4.4-mil­lion house in Cal­i­for­nia, the US. Chi­nese women tend to pay par­tic­u­lar at­ten­tion to kitchen size while shop­ping for homes in North Amer­ica.

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