Chinese investment in US homes contracts by the most in nearly 10 years as trade war, capital controls bite

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 per cent 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 per cent – among all foreign buyers for the seventh straight year. But China’s 56 per cent retreat was much sharper than the 36 per cent 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 per cent appreciation in the US dollar and a backlog of applicants for a key investment visa programme also affected sentiment.

“The data from our platform showed that in the first quarter Chinese buyers’ enquiries for US property was down 27.5 per cent 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 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 demand from mainland buyers had significantly weakened since late last year, and these buyers reported substantially more difficulties in transferring money out of China.