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Chinese are top foreign buyers of US homes
Publication Date : 12-07-2014
Chinese investors have topped the list of foreigners buying property in the United States, accounting for almost a quarter - or US$22 billion - of international sales in terms of dollar value.
In contrast, Canadian investors - the second-largest market - invested US$13.8 billion, making up 15 per cent of total international sales.
This marks the second year in a row that the Chinese have outspent Canadian investors, and, this time, it is by a much larger margin, said a survey by the National Association of Realtors (NAR) released on Tuesday.
Last year, the Chinese accounted for US$12.8 billion (19 per cent) in sales compared with US$11.8 billion (17 per cent) invested by Canadians.
NAR's chief economist Lawrence Yun told The Straits Times that Chinese investors have set their sights on US property because "property prices in China have risen so much that they are looking for an alternative. The US has not risen as much".
Economist William Yu from Anderson Forecast, a research arm of the Anderson School of Management at University of California, Los Angeles, said Chinese investors are also choosing the US because the country "provides a reliable rule of law to protect their property rights" and has good long-term prospects.
Overall, foreign purchases of US residential real estate jumped 35 per cent to US$92.2 billion in the year ended in March, from US$68.2 billionthe previous year. The other top foreign buyers come from Mexico, India and the United Kingdom.
While the Canadians account for more transactions than the Chinese do, the latter spend more.
On average, Chinese buyers fork out US$590,826 for a property compared with Canadians' US$314,718.
The NAR survey showed that buyers from China and India tend to spend more because they invest in states with higher property prices such as California, Washington and New York.
Canadians, on the other hand, tend to buy homes in Florida and Arizona, where prices are lower.
Said Dr Yun: "The Chinese buy in areas where the Asian population is higher, because they have a greater comfort level living in that area rather than in middle America."
It is also common, he said, for Chinese parents to buy property for their children who are studying in the US so that they do not have to worry about accommodation.
When asked if the Chinese market is expected to grow, he said: "As long as China sees their GDP growth at 7 to 10 per cent, the trend will continue."
Anderson Forecast's Dr Yu added: "I think Chinese investment in the US market will continue to rise for some time, until the price differential between these two real estate markets narrows."
- See more at: http://www.stasiareport.com/the-big-story/asia-report/china/story/chinese-are-top-foreign-buyers-us-homes-20140712#sthash.FQs4E5Qh.dpuf