Growing Backlash to Foreign Buying of Real Estate

I'm only surprised how long it took for the laws to be enacted.
Surge in Chinese housebuying spurs global backlash
Australia plans to impose a new tax on foreign property buyers after Chinese investment in Australian real estate soared 60 per cent last year, in the latest sign of a gathering international backlash against wealthy Chinese property investors.

The move, which came after locals complained about being priced out of the housing market, follows the introduction of similar, more punitive, taxes in Hong Kong and Singapore aimed primarily at discouraging the flood of mainland Chinese money into those markets. Governments in all three locations say that the new taxes are not directed at any single nationality.

...“The domestic Chinese market is very unstable, full of bubbles and depends on government policy,” says Cathy Zhang, senior sales consultant at Ausunland Group.

Prices for prime residential real estate in cities such as Los Angeles and Miami are roughly 25 per cent lower than in Shanghai.

Government restrictions, worsening pollution and decrepit health and social services have also led many Chinese to buy property in more developed countries they may wish to eventually emigrate to.

...Capital controls restrict Chinese residents from exchanging more than $50,000 in foreign currency each year, which would make it almost impossible for a Chinese person to buy a prime residential property abroad.

This means effectively that all property purchases by Chinese nationals overseas are technically illegal.
The fees are laughable though, at 1%. There is a 25% fine for foreign buyers who purchase existing homes, however.

Given negative social mood, growing backlash against immigration and increased discussion of capital controls at central banks, it was only a matter of time before foreign buying of real estate was added to the list. Numbers matter as well. The United States cannot accommodate the potential demand from wealthy and even upper middle class residents of the emerging markets, let alone smaller countries such as Australia. Hong Kong residents increasingly protest Chinese tourism due to the large number of visitors and Macau is considering restricting travel as well. Restrictive policies will become the norm in coming years.

No comments:

Post a Comment