China’s Slowdown Might Hit Your Home

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If you live in certain parts of the world, China’s economic problems might soon be coming to your front doorstep – literally. (Pictured above, buyers in China listen to a presentation to promote overseas property)

Often overlooked in China’s explosive economic growth is its effect on global residential real. As the Chinese economy slows, housing markets in the U.S., Canada, Australia, Singapore and Hong Kong will feel it, if they aren’t already. And if the government makes it harder for money to leave the country, these real estate markets will notice it even more.

  • Over the 12 months ending March 2015, the NAR says Chinese buyers spent US$28.6 billion on U.S. residential property, that’s four times more than they spent in 2011.
  • Canadian residential real estate is also a favourite destination for Chinese investors, with the cities of Vancouver and Toronto being the preferred locations.
  • As China’s economy slows, sales of foreign property to Chinese buyers will probably slow too. The Chinese government is also cracking down on money leaving the country and are trying to make it harder to do so. Until now, it was pretty easy for someone with the right connections to take huge sums of money out of China. (See the 69 percent of Chinese U.S. real estate purchases done in cash).
  • The slowdown in China’s economy will eventually cause their demand for foreign real estate to cool. This can already be seen in Hong Kong – property sales hit a 25-year low last year, and prices declined sharply.
  • As the value of the yuan depreciates, there may be an increase in Chinese demand for foreign property, because the more-wealthy Chinese will be trying to get their money out of China. But if they can’t – which could very well happen – house prices in a lot of markets around the world will start to notice.

See Full Article Source: Forbes

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