As the stock market continues to ebb and flow, it will not be a surprise if Chinese and other foreign money pours into Western real estate.
The Shanghai Stock Exchange is currently lower than it has been all year and its relative strength index is as low as it has been for two years, while the Dow Jones, despite recent growth, is still only slightly better than it was last October. Nonetheless, the perceived safety of real estate and the nature of its long-term investment could provide a solace for high-net-worth consumers worldwide.
China, along with Canada and the United Kingdom, is among the premier foreign investors in United States real estate, making up 16 percent of purchases of single-family homes and condominiums from abroad. In addition, the average purchase price of a property being purchased by Chinese consumers is nearly two-and-a-half times the national average, at a bit more than $830,000.
Moreover, even as there are fewer investments in real estate from abroad, the value of the homes being purchased continues to increase. This indicates that those who continue to invest in U.S. real estate from abroad are luxury consumers making larger investments.
The volatility of the stock market may not change that. With real estate prices trending up in New York City, long a haven for foreign investments, and the Shanghai Stock Exchange continuing to trend down, New York and other western markets may be better investments worried about losing money in the stock market.
A recent report by Sotheby’s International Real Estate and Wealth-X, “Homes As Opportunity Gateways,” found that foreign investors view Western real estate as a long-term, stable investment. If the rising prices of New York real estate scare some Chinese consumers away, it could benefit Canada and Australia, as Vancouver and Sydney real estate is a fraction of the price of New York’s even with property values on the rise.