>> The demand for palatial homes on Long Island's upscale North Shore, the tony suburbs of New York City, and believed to be the backdrop of The Great Gatsby, taking a hit this spring buying season, not because of policies at home, but from restrictions coming from thousands of miles away.
Reuters correspondent Koi Gwe Chi explains, why the blame falls on China.>> What we're seeing in Long Island is that because of capital controls in China, there are fewer and fewer Chinese who are buying high-end property on Long Island and by high-end, I mean about 2.5 million or 3 million.
Simply because it's harder for people to take cash out of China.>> In attempts to stop the Chinese currency from falling, authorities have spent the last eight months cracking down on large sums of money from leaving the country. The latest, if Chinese buyers use any of their $50,000 yearly allowance in currency exchange to purchase foreign homes and investments, they face harsh fines.
All these new rules are changing what and where the affluent Chinese buy. According to realtors, the impact on the luxury end of New York's Long Island, favored by the Chinese for it's reputation for good schools has been quick.>> The broker that was telling me that, in the past, they used to be a middleman who organized these Chinese buyers together, put them in a van and then take them to these open houses.
And so, you would have a van that probably sit about ten buyers, and it would show up and they were like, get off the van, and they were like start viewing the houses, and then we'd go to the next open house and then, etc. And she was just saying, she hasn't seen a single van this year.
The bottom line is that, if you had ten perspective buyers a year ago, today you may only get two or three.>> Couple that with a glutton housing cost by over building in response to Chinese a couple years ago, and the medium prices for the neighborhood are starting to fall.
But Chinese buyers are not gone completely some realty say, customers are shifting their focus to more modernly priced properties, around 1 and a half million dollars.