China for purchasing property overseas could be longer lasting and impact demand in the short term , for six to twelve months .
Getting capital out of China is becoming progressively difficult . Beijing ’ s anti-corruption movement has slowed down high rollers ’ capital transfer through casinos in Macau , one of the routes for money transfer , and has even investigated overseas accounts and limited ATM withdrawals overseas . Chinese stock markets remain unnerved ; the Shanghai index has lost 45 % of its value since its peak on 12 June 2015 . More policy is expected to tighten capital flow . The desire to buy in liquid overseas markets is strong but the cash may not be available . However , in the medium term the Chinese middle class is still very wealthy and eager to spend . “ The [ Chinese ] markets have nothing to do with the economy ... it ’ s like trying to read an economy based on how well a casino is going ,” Think Global China business trend expert David Thomas has said .
If demand for overseas property falls temporarily , it is likely that only lower-priced properties such as apartments would be affected but not the luxury market . Investors will begin to reconsider property as the current stock market instability will have a lot of investors looking for a safer and less volatile investment and real estate markets will benefit from this . According to Chinese law , individuals can take a maximum of US $ 50 000 ( R768 000 ) out of the country . Chinese banks that once looked away when investors transferred money to outside China are now scrupulously applying rules about the transfer of capital overseas . This means fewer Chinese buyers can get enough money out of the country to buy real estate . Investors who sold at the share market ’ s peak became yuan millionaires , but those who held on have lost much of their wealth .
Only a small proportion of Chinese investors managed to liquidate their assets before the crash and clampdown . But a small percentage of China ’ s share market is still a vast number of investors . Families could also team up to circumvent the US $ 50 000 foreign investment limit . Those who managed to get out of China before the rout are looking for a safe haven which is resilient to any downturn . Chinese students are also buying , with the expectation that they and their parents will emigrate permanently in the next few years .
2016 Predictions Policymakers in Beijing in 2015 cranked up their efforts to ease earlier restrictions on the property market after a sharp downturn in 2014 raised concerns that China ’ s economy could face a hard landing . The government cut interest rates , allowed people to buy multiple homes , and granted developers access to China ’ s onshore bond markets . That led to surprisingly strong sales — but will the momentum continue ?
What happened in China ’ s housing market along with other areas of its troubled economy was “ the big news to South Africa ’ s economy and thus its own residential market ’
Housing Sales Growth Could Slow Nationwide housing sales could slow to a more modest 0 % -5 % in 2016 as the effect of supportive monetary and regulatory policies will taper off , according to Moody ’ s Investor Services . Housing sales by value are likely to increase more than 10 % this year . Official data showed housing sales grew 18 % in the first ten months of 2015 from the same period in 2014 .
Policymakers Will Roll Out Further Supportive Measures With real estate investment still sluggish despite an improvement in sales , Beijing remains compelled to provide policy support to the market . Economists expect further interest rate cuts , after six reductions since late 2014 ; lower down-payment rates ; tax rebates for homebuyers ; land reforms ; and liberalized household registration policies .
The Outlook for Home Prices is Shaky The uptick in sales and home prices has been driven largely by China ’ s biggest cities , and stable income growth could provide some support over the first six months of 2016 . But there remains a risk of overheating . The National Academy of Economic Strategy , a unit of the Chinese Academy of Social Sciences think tank , said in a report that in some cities where prices have run up , there is a risk that prices might “ fall off a cliff ” in the second half next year .
Construction Starts Could Show a Third Straight Year of Decline Homebuyers would have to work through the buildup of unsold housing for another year before inventories normalize , according to Rosealea Yao , an analyst at GaveKal Dragonomics . Housing starts were down 15.3 % in the first eleven months of 2015 , compared to the 14.4 % decline recorded for the whole of 2014 .
14 MAY 2016 SA Real Estate Investor www . reimag . co . za