FOLLOW THE MONEY: China’s Capital Outflows Just Reversed, Bad News For Global Real Estate.

The world’s greatest overseas real estate binge might finally be over. According to the People’s Bank of China (PBoC), China saw its foreign exchange reserves rise to over US$3 trillion. The unexpected rise is the first in 8 months, and may indicate that the new regulatory crackdown on capital outflows is actually working. This is bad for real estate markets that have seen a sudden surge of buying activity from Mainland Chinese buyers.

China’s capital outflows turned into inflows, meaning more foreign currency went into the country than left. The PBoC found itself with US$6.9 billion more than the month before, a 0.25% increase. This comes after US$220 billion in outflows in 2016, and another $12 billion in January. While it doesn’t seem like a lot in contrast, analysts polled by Reuters expected a drop of more than US$25 billion. Analysts are now adjusting projections since this means China’s foreign reserves are a full US$31.9 billion higher than they anticipated. This could mean that China’s new capital controls are much more effective than analysts had previously anticipated.

Will this be enough to pop the real estate bubble in Western metroplexes, or will Chinese-held dollars find new routes overseas?