Australian actress Cate Blanchett wanted to sell her home on Sydney's waterfront. The buyer who wanted it was from China. The trouble started right there.
Getting the money out of China proved impossible. The AU$20 million ($21m) price tag was far more than the maximum of US$50,000 ($70,130) that Chinese citizens are allowed to convert each year, due to capital controls. The would-be buyer couldn't settle and the deal fell apart.
It was one of dozens of failed sales affecting Chinese nationals in Australia, say several real estate agents handling such transactions.
As Chinese citizens embark on an unprecedented foreign property buying spree, the Blanchett case illustrates how such money flows have created an economic and political backlash, both in China and abroad. Nowhere is this clearer than in Australia, the developed nation most exposed to China.
Chinese authorities are stepping up capital curbs just as myriad restrictions in Australia have made mortgages tough to get for foreigners, putting buyers from China in a squeeze that could dent the property market Down Under.
While that's not unwelcome for Australia's central bank, which is keen to take some steam out of rising prices, it shines a light on the struggle to digest China's cash exodus as it flows further afield.
"People are finding it's very hard to get a mortgage here and then find they can't get their money out of China, and they're stuck," says Lulu Pallier of Sotheby's International in Sydney, who handles high-end sales to Chinese buyers.
Chinese authorities worry that outflows of capital, made worse by the declining yuan, could continued to drive devaluation. Estimated outflows in October reached US$73 billion, picking up again after having slowed in the middle of the year, says Capital Economics. Estimates from Bloomberg Intelligence show about US$620b flowed out in the nine months to the end of September.
President-elect Donald Trump's proposed tax cuts and infrastructure binge could accelerate such flows, by revving up US growth and inflation and pressuring the Federal Reserve to lift interest rates faster than the market expects. The yuan has fallen almost 6 per cent this year, to its lowest since mid-2008.
"If the US rates rise and the US economy accelerates, it will be a matter of time when more capital leaves China," says Stephen Jen, chief executive officer of Eurizon SLJ Capital and a former International Monetary Fund economist.
Chinese banks have been told to tighten loopholes that allow individuals to evade capital controls, and police have started arresting people in a campaign to prevent cash finding its way out.
Authorities have also banned friends or relatives from grouping together currency quotas, curbed the cross-border activities of underground banks and asked lenders to reduce foreign-exchange sales.
Still, there are plenty of alternative routes for determined buyers.
Business owners can finance home purchases through offshore trading companies, while some Chinese developers allow clients to pay for overseas units in yuan.
But even if they do succeed in getting their money out of China, would-be property buyers are now running into heightened restrictions in Australia.
Last year, the Government forced a company owned by China's Evergrande Real Estate Group to sell an A$39m Sydney mansion, the highest-profile casualty of a crackdown on illegal home-buying by foreigners.
This year, Australia's four biggest lenders and Citigroup said they would no longer approve mortgage applications in Australia that rely on foreign income denominated in Chinese yuan and four other Asian currencies. Westpac said it wanted to support Australians and permanent residents' home-buying instead.
Local financing alternatives are emerging. Australian billionaire developer Harry Triguboff has doubled the amount he is lending to apartment buyers, especially those affected by the Chinese squeeze, according to information from his Meriton Group. Its mortgage book has swelled by A$50m over the past four months to about A$120m as bank funding dried up, it said.
In October, the Reserve Bank of Australia highlighted the risk from buyers failing to close on property purchases. It said the property industry had mounting concern that this will become more common in Brisbane, Melbourne and Perth.
"These concerns arise from a combination of tighter financing conditions for purchasers, especially for non-residents and those reliant on foreign income, and valuations at settlement below the contracted price," the central bank said.
Australia approved A$24b worth of Chinese real estate investments in the fiscal year ended June 2015 -- or a quarter of all such approvals -- according to the most recent data available. Chinese were by far the largest foreign buyers, followed by Americans with AU$7b.
We are reluctant to take on new clients unless they have 100 per cent of the cash for a property.
Australian home prices have climbed by more than 50 per cent since 2008 in the biggest cities, partly because of Chinese purchases. Restrictions on Chinese buyers by both China and Australia could take some steam out of Australia's roaring east coast property market, giving the central bank scope to leave interest rates unchanged for longer, to support other areas of the economy.
"Settlement issues from overseas buyers means additional supply in pockets of inner-city Brisbane, Sydney and Melbourne where there's already some emerging downward pressure on prices," says Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney.
"If that has a broader ripple effect, together with a construction cycle peak, it could give the RBA more flexibility."
Meanwhile, Oscar-winner Blanchett's sandstone manor in the Sydney suburb of Hunters Hill -- with six bedrooms, tennis court and a pool with private spa -- is back on the market.
While there's still strong demand for Australian property from Chinese buyers, their inability to raise funds is dampening enthusiasm for dealing with the previously cash-laden and lucrative group, says Scott Kirchner, who runs China operations from Shanghai for Australia's Beller property group.
"We are reluctant to take on new clients unless they have 100 per cent of the cash for a property," he says. "But then there's the issue of how do they get the money out of China."
- Non-resident foreigners (New Zealanders excepted) can't usually buy existing homes -- just new dwellings, or vacant land.
- Foreign buyers of vacant land must build on it in four years.
- Some states also hit foreign buyers with extra stamp duty.
- Major banks have restricted lending to foreigners without an Australian income