FOR David Wong, the business of selling homes isn’t as good this year as it was in 2015, and he’s blaming that on a decline in customers from China.

    “The residential property market here, especially for those priced between US$2.5 million to US$3 million, has been affected by China’s measures to control capital flight,” said the New York City-based Keller Williams Realty Landmark broker. “You need to cut the price, or it may take a real long time.”

    Wong is not the only one who has felt the cooling in the U.S. real estate market for foreign buyers. Total sales to Chinese buyers in the 12 months through March fell for the first time since 2011 to US$27.3 billion from US$28.6 billion a year earlier, according to an annual research report released by the National Association of Realtors. The number of properties purchased by Chinese also declined to 29,195 units from 34,327 units.

    While the total international sales saw its first decline in three years, the 1.25 percent pace is slower than 4.5 percent recorded for Chinese buying. In terms of U.S. dollar value, the total share of Chinese buying of international sales dropped from 27.5 percent to 26.7 percent.

    “Some capital flow control measures have definitely affected the sales to Chinese buyers,” said Lawrence Yun, chief economist for the Realtors group and lead author of the report.

    The yuan began plummeting in August last year, driving the Chinese currency to a five-year low versus the U.S. dollar. The Chinese authorities have been compelled to increasingly tighten the noose on cross-border capital flows to defend the yuan and to slow down the burnout of the nation’s foreign exchange reserves since then. This includes increasing scrutiny of transfers overseas to closely check whether individuals send money abroad by breaking up foreign currency purchases into smaller transactions.

    New measures were also introduced in December to crack down on illegal China UnionPay Co. card machines, which were suspected of being used to channel funds offshore via fake transactions. Meanwhile, illegal foreign exchange transactions from underground banking were brought to regulators’ attention, as China busted the nation’s biggest underground bank, which handled US$62 billion, according to a November report by the People’s Daily.

    China’s efforts, coupled with restrictions on companies’ foreign exchange business as well as curbing the offshore yuan liquidity to make currency shorting costlier, finally managed to work: China’s foreign reserve outflow has been mostly contained after climbing to a peak of US$108 billion in December. The reserve resumed an increase in March and April.

    How to get money out of China plays an important role for Chinese buyers in the U.S. property market.

    “Many Chinese buyers are paying all cash in the United States because they neither have a credit history nor income proof here, making it impossible for them to obtain mortgages from banks,” Wong said.

    Seventy-one percent of Chinese buyers in the U.S. real estate market paid completely with cash, the Realtors group said in its report. One-fifth secured mortgages from banks operating in the United States. In comparison, only 7 percent of Indians paid all in cash, while 90 percent had financing from U.S. banks.

    A slowing economy and the weaker yuan also played significant roles in suppressing the Chinese demand, said Yun.

    The median price of existing home sales in the United States increased by 6 percent in March 2016 from one year ago, but when measured in the Chinese currency, they were 10 percent more expensive, Yun estimated. They were costlier when it comes to California and New York, major destinations favored by the Chinese buyers, he said. (SD-Agencies)