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June 8, 2017 | China’s International Realty Flows Slowing

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

Earth to ‘hot’ realty markets:  China’s international realty flows are slowing.

In January China enacted new rules preventing its citizens from borrowing the foreign capital allowance of others, and further limiting the uses for which capital can be exchanged to foreign currencies.  Real estate is not one of them.  More restrictions on money supply are expected shortly and the effects are already being noted in China’s foreign reserve ratios that rebounded to a 7 month high in May. Indiscriminate buying in previously hot realty markets has noticeably slowed in the process.

While money laundering and cash banking in foreign properties may have justified unreasonable prices for many Chinese buyers, it is all the highly levered, domestic buyers who were speculating along for the ride, which are now set up for a rude awakening.

See:  China’s massive international realty spree is now officially dead:

Real estate markets that saw locals scramble to cash in on foreign buyers are now noticeably cooler. Toronto is seeing new listings hit an all-time high, coupled with a massive dip in sales. New Zealanders that were complaining about a “flood” of Mainland Chinese buyers, are now complaining about the market cooling faster than expected. Australia’s leading property analyst is now telling people to prepare for a 10% drop in prices soon. The one place that’s bucking the trend is Vancouver, where locals are still convinced that Mainland buyers are somehow buying – but not showing up in any significant statistics. Good luck with that Vancouver!

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June 8th, 2017

Posted In: Juggling Dynamite

One Comment

  • Avatar Chris says:

    This assumes that China has full control of currency conversions. Given Bitcoin and other cryptocurrencies have a combined net worth exceeding $100 billion (U.S.), that may not be the case. I’d be interested to see an analysis of how many Mainland Chinese buyers are able to covertly export money using cryptocurrencies (should such an analysis exist).

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