Immigration rules, yuan's weakness and property frauds slam brakes on buying spree

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-on-year, 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 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 Beijing-based 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.

zhuwenqian@chinadaily.com.cn