Chinese buyers bought more US homes, for more money, than any other foreign investors last year, as China’s wave of outbound investment continues to spread globally.
Home buyers from mainland China, Hong Kong and Taiwan together purchased $28.6 billion worth of US residential property in the period from April 2014 to March 2015, according to a report released recently by the National Association of Realtors. The total for Chinese investors was more than double the $11.2 billion in housing purchased by Canadians, who were the next biggest foreign buyers.
The surge in Chinese home purchases comes despite a drop in activity from other foreign buyers and coincides with mainland investors becoming the biggest foreign purchasers of homes in Australia this year.
Chinese Rush In as Others Slow Down
Overall, the number of sales of homes to foreign buyers dropped by 10 percent from the previous year, but Chinese buyers tastes for expensive homes helped to push up the dollar volume of homes sales by 13 percent to $104 billion.
The average Chinese buyer spent $831,800 on their new home in America, more than double the amount spent by Canadians who spent an average of $380,300 on their home south of the border.
In the 2014-2015 period, sales of US homes to Chinese buyers climbed by $6.6 billion, to total $28.6 billion. By comparison, purchases by Canadian buyers fell last year to $11.2 billion, down from $13.8 billion in the previous period.
In 2014-15, five countries accounted for 51 percent of all US home purchases by international buyers, with Mexico, India and the United Kingdom rounding out the top five. Buyers from India accounted for $7.9 billion in US home purchases, Mexicans made $4.9 billion in deals, and UK citizens bought $3.8 billion in US housing. The Association does not provide a breakdown of Chinese buyers among the mainland, Hong Kong and Taiwan.
Chinese Head for the West Coast,
According to the survey by the non-profit industry body, Chinese buyers continue to show a heavy preference for housing on the west coast of the US, with California accounting for 35 percent of all sales of housing by units Chinese buyers. Next on the list of preferred housing destinations in the US was Washington state, which accounted for 8 percent of Chinese transactions, and New York state was third at 7 percent.
In markets such as San Francisco and Los Angeles where local buyers have complained of having to compete with Chinese investors for scarce housing, part of the competitive challenge may come from the choice of financing. The NAR reported that 69 percent of Chinese buyers paid for their US home completely with cash.
Australia, the US, and Then…
The surge in Chinese investment closely parallels a similar move by mainland buyers to purchase homes in Australia during the last few years.
Mainland Chinese buyers spent A$5.9 billion ($4.6 billion) on Australian homes in the 2014-2015 fiscal year, more than double what they had put into the market as recently as 2012-2013, according to a report released last month by the country’s Foreign Investment Review Board (FIRB).
According to the regulatory body, which is responsible for vetting all foreign investment Australia, Chinese spending on real estate in the country is now double the amount coming from the US, which put in A$6.14 billion ($4.84 billion) to rank second. Canada was third on the l