Understanding the culture of Chinese buyers

Understanding the culture of Chinese buyers

It’s no secret that Chinese buyers sometimes behave differently to Australian buyers in the property market.

The number of Chinese people buying Australian properties has grown. At the same time, some agents, brokers, vendors and bankers are expressing frustration at what is seen as their crazy behaviour.

They see Chinese people paying what are often seen as inflated prices, as well as arguing, jumping around and bargaining hard in a bid to buy a property.

But dig a little deeper and you will start to understand that there are historic and cultural reasons behind this behaviour.

Historically, Chinese people like to own property. There is a cultural attitude towards owning your own, not borrowing or leasing it.

Before the rise of Communism, which started in 1949, many Chinese owned their own property, whether that was a factory, a farm, shop or house. Of course, once Communism was established this changed and everything was shared.

However, the dream and ideal of property ownership is deeply established in their minds. So when Chinese people are buying property it is not because they are following a trend or because the market is ripe; it is a tradition.

Of course it’s true that we Chinese people like to bargain, regardless of we are rich or poor. This is how most people buy things in China – even if we can afford something we still bargain for it.

There are two reasons for this. If you buy something and didn’t bargain for it you would be seen as foolish. But also, if you get a good bargain, you “win face” in Chinese culture – and face is more important than saving money.

When it comes to the Australian property market, of course vendors can factor in the Chinese buyers’ love of bargaining by inflating the sale price.

Here’s a word of advice: this can backfire. When Chinese buyers find out this was the case, and that they’re being played, that will end of the relationship. They will never go back to you.

In Chinese culture, value & relationships are placed ahead of everything else

But if they find that you’re reasonable, honest, polite and friendly then not only will they go back to you for more business but they will also recommend you to their friends and family as well.

Indeed, relationships are sometimes worth more than money and if the relationship is good, Chinese buyers may even be happy to pay a little bit more.

I would suggest trying not to be too harsh on Chinese buyers, especially in the start of your dealings with them. If you want a long-term relationship, you must understand their perspective.

There is a saying among Chinese that means less short term profit but more long-term business. In other words, do not kill the goose and take its egg.

Rise in US house prices a "positive" development

The small month-on-month rise experienced in US house prices in May has been described as a "positive" step for the sector by one real estate expert.
Adam Samuel, director of Nubricks.com, said that it is too soon to tell whether this will develop into a consistent upturn, but welcomed the news that values are starting to climb.
His comments come after the latest Standard & Poor’s/Case-Shiller index revealed that locations on the ten and 20-city composite indices increased by 1.1 and one per cent respectively in May compared to April.
However, all regions recorded a drop when compared to the same period in 2010.
Mr Samuel stated: "A lot of people are looking around and a lot of people are searching, but in regards to actually putting their money down and investing in the US market, I would say that things have remained fairly consistent over the last 12 months."
He did go on to point out that if enough investors enter the market, house prices will start to rise again.

‘Excellent opportunities’ can be found on Spanish property market

Buyers keen to find a property in Spain do not need to rush into any deals, it has been advised.
Freelance property journalist and founder of Propertyjournalist.com Marc Da Silva explained that prices are not likely to increase in the nation over the next couple of years.
He even suggested that they may drop further, which could enable investors to find a better bargain.
"In Spain, prices have been falling there at a rapid and alarming rate for quite some time. It is a wonderful opportunity to negotiate a cheap property deal," Mr Da Silva stated.
But he recommended that buyers wait to make a transaction until the pound has strengthened against the euro because the problems being experienced by several eurozone economies indicates that the currency is "potentially overvalued".
Earlier this month, Primelocation.com revealed that the number of searches for real estate in Spain dropped significantly between the first and second quarters of the year, falling by 24 per cent during this period.

California property appealing to foreign buyers

Real estate in the Silicon Valley region of California is increasingly being targeted by foreign investors, it has been claimed.
An article in the San Jose Mercury News noted that the influx of overseas buyers is being fuelled in part by workers moving to the area from elsewhere, as well as those looking for investment properties.
Speaking to the publication, realtor with Alain Pinel in Los Gatos Michael Riese commented that many buyers from outside the country consider "a home purchase in the US as a solid investment, compared with what they may otherwise put their cash in back home".
The publication revealed that Chinese buyers are among the most active in the Silicon Valley real estate market at present.
And it seems that California is not the only region that is appealing to investors when it comes to US property, with the country as a whole seeing the sector improve, according to a recent Jones Lang LaSalle report.
Research recently published by the firm revealed that global direct investment volumes were up by seven per cent in the second quarter of the year – compared to the first three months of 2011 – and had risen by 47 per cent over the same period in 2010.

US homeowners ‘overpricing’ properties

Many US homeowners looking to sell their properties are overvaluing their abodes and pricing them significantly above the current market value, research has revealed.
According to a survey by Zillow, people who bought real estate in or after 2007 are overpricing by 14.1 per cent on average.
It is buyers who made a purchase between 2002 and 2006 who are the most realistic, as they tend to place their properties on the market at 9.3 per cent above their actual worth.
Those who bought before 2002 ask for 11.6 per cent over the true value, the study added.
Chief economist at Zillow Dr Stan Humphries commented: "Overpricing homes causes them to stagnate on the market and keeps inventory from decreasing – not a desirable outcome for either the sellers or the market as a whole."
Earlier this month, the Clear Capital Home Data Index revealed that house prices in the US fell by 3.2 per cent over the first six months of 2011, with a further decline of 2.4 per cent anticipated by the end of the year.

Indian buyers targeting Italian property market

Wealthy Indians are increasingly purchasing properties in Italy, it has been revealed.
Vice-president of credit risk management at Deutsche Bank Gulzar Malhotra told Business Standard that locations such as Sicily and Tuscany are proving popular among Indian investors.
He explained that the decline in property prices experienced across Europe is attracting more foreign buyers to the marketplace, with perennial favourites like Italy among the top locations for those seeking second homes or investment opportunities.
However, Indians are restricted in terms of what they can purchase because the Reserve Bank of India has capped the amount that can be spent on foreign property annually to $200,000 (£125,517) per person.
In May, DTZ published its Money into Property Europe 2011 report, which noted that transaction volumes across the continent increased by 64 per cent in 2010 compared with the previous year.
The organisation went on to predict this to rise by a further 20 per cent by the end of 2011.

Australian property market ‘to start recovery’

Property prices in Australia are expected to remain steady throughout the rest of this year, one business research organisation has predicted.
BIS Shrapnel has published its Residential Property Prospects 2011-2014 and stated that a crash in the market is not anticipated.
In fact, the firm commented that some of the nation’s state capitals should experience "moderate price growth over the following two years", despite a drop in the median value of homes being recorded in many areas in the first three months of 2011.
Meanwhile, chief executive officer of Metropole Property Strategists Mike Yardney agreed that the Australian real estate sector is on the road to recovery.
He cited population growth, a culture of homeownership and a lack of new developments as factors that could support property prices and underpin growth within the industry.
Mr Yardney also noted that due to a shortage of homes in certain areas, rents are expected to rise, which could be good news for any investors with residential properties in their portfolios.

Egypt ‘a good option’ for property investment

One expert has claimed that Egypt could be a good bet for anyone seeking an overseas property investment.
Director and founder of Rogue Property David Freeman stated that the north African nation is "definitely a place I’d recommend".
He noted that Sharm el Sheikh, a Red Sea resort in the Sinai Peninsula, has some developments that are worth considering and added that its popularity as a tourist destination enhances its appeal.
Meanwhile, a report in the Financial Times earlier this week revealed that construction activity in Egypt has slowed considerably since the revolution that took place in January this year.
With less stock being added to the Egyptian real estate market, investors may decide that now is a good time to make a purchase.
Hassan Allam, managing director of Hassan Allam Construction, told the publication that many people are holding back until the results of the elections – which are due to take place in September 2011.

Regional variations emerge in Australian property market

Regional differences are emerging in the Australian housing market, with some regions reporting price rises and others seeing values decline.
Sydney and Canberra are seeing real estate values continue to climb, but those in Perth and Brisbane falling, according to the latest house market index.
In addition, the figures show that cheaper properties are selling better than the luxury end of the market, with interest rates and natural disasters such as the floods in January taking their toll.
According to Tim Lawless, RP Data’s research director, expensive suburbs have helped drag the overall market down.
Indeed, over the year to end April, properties in the most expensive suburbs fell 5.4 per cent. This compares to declines of 0.9 per cent and 0.5 per cent in the middle priced suburbs and cheapest suburbs respectively.
"The luxury end of the housing market is also showing its volatility. During the growth phase of the cycle the most expensive homes realised the highest capital gains," he said.
"Yet as the market cools premium home values seem to be losing steam the fastest."

Spanish property market ‘looks bright’

Despite a number of indices suggesting that prices are falling and oversupply is having a negative impact on the sector, one firm has offered a positive outlook for the Spanish property market.
"In Spain things are looking very bright," Dr Dennis Coote, founder of The Hampshire & Home Counties Property Networking Club, said.
"Prices are not going up very fast, but there’s a very lively atmosphere. I don’t see any evidence of people being hard up here, honestly. It’s very much [a vibrant market]," he explained.
His comments follow the publication of new research by the Royal Institution of Chartered Surveyors into distressed property listings.
According to its Global Distressed Property Monitor, Spain has seen one of the largest increases in foreclosed property anywhere in the world, with the firm only expecting the number to increase.
Indeed, in the coming three months, Ireland, Spain, Hungary and Italy expect the highest numbers of distressed properties to come to market, while Russia, China, South Africa and Poland expect the lowest.