Buildings under construction are seen among fog in Rizhao, Shandong province, China.
Reuters/Stringer
China’s housing market is so tough that buyers have been heading to the US to purchase a home.
Chinese buyers spent $13.6 billion on US residential real estate in the year ending March 2023.
A shaky economy and lower confidence in the property sector have the housing market in China.
China’s housing market is so bad that homebuyers appear to be flocking overseas to purchase a home in the US, according to data from the National Association of Realtors.
Chinese buyers were the biggest source of foreign capital into the residential real estate market through the year ending in March 2023, NAR said in a recent report, with buyers spending $13.6 billion on US residential properties in the period. That’s more than double the total amount spent in the prior year, with Chinese buyers spending $6.1 billion on home purchases in the period ending March 2022.
Chinese buyers represented 13% of foreign buyer home purchases in the US, up from 6% of foreign buyer purchases last year. Their median purchase price for a home was $723,200, almost double the US median home price of $419,103, per Redfin data.
In a shift from recent trends, most buyers purchased homes as a primary or secondary residence rather than as an investment, the NAR report said.
The increased interest in US real estate comes amid a downturn in China’s domestic housing market, with home sales plunging through the first half of the year.
Though the government has implemented measures to boost its property market, new home sales plummeted 33% year-over-year in July, up from a 28% annual decline reported in June.
That’s largely due to the nation’s economic woes, with the youth unemployment rate recently notching a record 21%, as well as shaken confidence in the property sector after major property firms defaulted in 2021.
Waning attention in Chinese real estate spells trouble for the nation’s broader economy, as the housing sector makes up around 25% of national GDP when accounting for activity in related sectors, per an estimate from JPMorgan.
That’s partly the reason why China’s economic reopening has so far been a disappointment. Demand has failed to rev up in large chunks of its economy since the pandemic, resulting in prices plunging to near-deflationary levels and weak economic growth.