Chinese Domestic Housing Policies: Understanding Investor Responses and Implications for International Housing Markets

The increasing integration of the globalized financial market and real estate has resulted in growing levels of international investment in property markets. Particularly, in recent years, it has been observed that investors from China have become increasingly active in global real estate markets, which has been widely criticized to exacerbate existing affordability pressures in recipient nations. Though general explanations for the phenomenon have been posited (asset protection, education, immigration, retirement housing, accommodation for multi-national firms), little is known about the underlying drivers of Chinese foreign investment in real estate. This paper, focusing on the impacts of China’s recent domestic housing policies, examines why individual Chinese investors and development firms have changed their investment strategies and decided to develop/purchase properties overseas. Through conducting 15 in-depth interviews with four groups of participants, it has been found that China’s domestic interventional housing policies- in particular, the ‘purchase restriction’ policy, have not only created great impacts on its domestic housing market, but also encouraged Chinese outward investment in real estate. Therefore, it implies, as housing market becomes global, the adjustment of one country’s domestic housing policies has inevitably produced direct and indirect impacts on international real estate arenas.