Prominent Republicans including Ron DeSantis have voiced their concerns as huge numbers of American properties are snapped up by Chinese citizens.
While most other nations including Canada, New Zealand and Australia impose taxes on foreign nationals buying property in their nations to avoid a spike in prices and the need to continually build more homes, there are no such taxes currently in place in the US.
This has led to a large increase in Chinese citizens buying US property over recent years, with Chinese investors having purchased around $6.1 billion worth of American property between April 2021 and April 2022 according to The National Association of Realtors (NAR).
The data shows that California is the most popular state for Chinese buyers at 31 percent of the total numbers opting to purchase property there, New York was second most popular for Chinese investors at 10 percent, with the Sunshine State tying with Indiana for third most sought-after locations at 7 percent.
The report’s data showed that over half of Chinese buyers (52 percent) purchased property to be used as a primary residence to live in and 25 percent invested in vacation rental.
The most popular type of homes for Chinese nationals to buy were detached, single family homes.
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Florida’s governor, Ron DeSantis said the number of foreign buyers is a “huge problem”. Florida is now the number one location overall for non-citizens to buy real estate:
“I don’t think they should be able to do it. I think the problem is these companies have ties to the CCP, and it’s not always apparent on the face of whatever a company is doing,” he told Fox.
He went on to talk about major Chinese companies purchasing large swathes of American farmland and said that their intentions were “not always apparent”.
His comments came after Chinese company Fufeng Group purchased 300 acres of Dakota farmland this month. The land was situated just 20 minutes away from Grand Forks Air Force Base which is testing specialized drone technology.
Chinese citizens make up the vast majority of foreign property buyers in the US. Canada was the second largest buyer, having spent $5.5 billion in the past year, followed by India at $3.6 billion and then Mexico at $2.9 billion.
Real estate professor, Benjamin Keys said they are “moving their money abroad to avoid taxes and to avoid scrutiny” and are partly opting for the US because of the lack of taxes for foreign buyers, which many other Western nations impose.
Singapore, Hong Kong and Canadian regions of British Columbia and Ontario, Victoria in Australia and New Zealand all take a sur-charge from foreign property investors.
Singapore’s stamp duty (foreign property tax) was set at 20 percent while Hong Kong charges foreigners 30 percent to buy its homes.
According to Keys, the problem could result in higher house prices for Americans as more homes are snapped up by foreign buyers:
“The big picture is we have an affordability crisis for housing in the cities where the jobs are,” he continued.
“There are a lot of hoops to jump through to get anything built in these places, especially to build in a way that is dense.”