Up to Half of Overseas Property Purchased by Chinese Buyers Left Vacant

A recent housing survey has revealed that China’s property buying activity remained strong due to fears of a growing price ceiling.

According to the UBS Evidence Lab’s survey, one in five 5 consumers bought in the last 12 months, with one third of purchases being triggered by expectations of higher prices, and 53% of people, concerned prices would rise, said they brought forward their purchase.

The researchers underwent a large-scale online survey of 3,300 Chinese consumers, aged 21-64 who reside in 175 Chinese cities.

“27% of consumers have indicated an intention to buy in 2017,” the UBS’s survey report said.

“While a slightly softening on 2016, it still implies robust activity. We note our survey period is one monthly later which may affect the comparison.

“Our current survey shows 45% of consumers plan to buy over the next two years, fairly similar with our February 2016 survey where 43% were planning to buy over the following two years.

Around 10% of the survey’s respondents own residential properties outside of China and Hong Kong, which was in increase on previous reports.

63% of the respondents with overseas properties hold them for investment purposes, with 65% of those rented to tenants.

The report said around a quarter of properties purchased by mainland Chinese are left vacant, however, a further 25% of overseas property owners use their property on a temporary basis.

“In effect around half of the overseas property owned by mainland Chinese is not fully utilised,” the report said.

The majority of overseas properties were purchased using cash. The majority of those who purchased using a mortgage have secured the mortgage from a Chinese bank in China (or) from a Chinese bank in the market the consumer has bought in.

Of the respondents who searched for overseas properties, Hong Kong and Singapore were the more popular markets.

"However, their enquiries may lead them to understand about the additional foreigner stamp duty, which may dampen their enthusiasm.

"We note in Hong Kong, some developers have been willing to rebate (in whole or in part) the foreigner stamp duty to attract foreign buyers."