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FX.co ★ Chinese can no longer afford US real estate

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Forex Humor:::2015-12-03T09:07:00

Chinese can no longer afford US real estate

Over the last five years, the Chinese were the most active buyers of residential property on the US market surpassing the Canadians. Chinese nationals bought $500,000 villas in New Jersey, $3 million houses in California, and $13 million Manhattan apartments.
But in recent months, the demand on the US real estate among the Chinese buyers has declined considerably. China’s stock market slump, the economic slowdown, the yuan devaluation, and restrictions on capital outflows made things difficult for those who had not bought elite housing in the United States.
Mainly those businessmen who are worried about the current state of the economy in China are purchasing real estate in the USA. Now they are looking for housing more carefully with the average budget starting from $1 million.
Realtors say that the next year, the demand from Chinese buyers will slow down for one or two years.
Chinese buyers make up around 30% of all foreign buyers in the United States. In popular cities like Irvine their share amounts to 80%.
A particular feature of Chinese buyers is that they usually pay in cash. Last year, the average purchase price was $500,000, almost twice higher than the general price for all buyers. At the same time, one third of Chinese purchases are located in California, with 8% for Washington and 7% in New York.
For Chinese citizens, buying real estate in the USA represents one of the simplest legal ways to withdraw money. So, over the past few years, they spent billions of dollars on real estate.
Experts think that when the Federal Reserve increases the interest rate, the Chinese are likely to stop making purchases in the United States. In this respect, the housing market slump may press the central bank to refuse from the tightening of the monetary policy.

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