IS THE CHINESE LOVE AFFAIR WITH AUSTRALIAN REAL ESTATE OVER? Cough … cough …

CHINESE buyers spent less than the peak of 2016 however Australian real estate is very attractive because …

with China taking steps to restore its economy it is having negative consequences for Our Australian Society …

-Chinese banks offer a very low interest rate

 

-China worst performing stock market in 2018

 

-China is squeezing its real estate market to keep investors out

-the Chinese government is investigating equity funds and alternate investment

AND …  the US-China trade war could drive more Chinese buyers and students on our shores because of Trump’s visa policies … 

OBVIOUSLY Australian First Home Buyers are still up against it!  As with Our Universities and Academics raising concerns about lowering standards for International Students and …

 

-local students having to complete group assignments with students who had little English

-the dumbing-down of standards and too many university graduates chasing too few professional jobs

-university students are stuck paying off expensive and increasingly worthless degrees

taxpayers are stuck writing-off unpayable debts

-and the broader population is suffering under the never-ending population crush

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Chinese buyers chose to purchase Melbourne property ahead of Sydney in 2018, with Melbourne expected to retain the top spot this year too.

Photo:  The Urban Developer: Chinese buyers chose to purchase Melbourne property ahead of Sydney in 2018, with Melbourne expected to retain the top spot this year too.

 

Is the Chinese love affair with Australian real estate over?

Chinese buyers spent less in 2018 than previously. What about 2019?

Azal Khan

Digital Journalist, Your Money

Chinese buyers helped drive the property boom in Sydney and Melbourne property that lasted about five years and fizzled out in late 2018.

But with tighter lending rules and global factors affecting foreign demand in Australian property, how will the market be impacted?

New data from Chinese property portal Juwai.com shows interest from buyers dropped 20 per cent last year. But the final three months of 2018 saw inquiries surge almost 60 per cent.

Juwai spokesperson Dave Platter joined Your Money Live to explain what’s going on with foreign buyers.

“This is a year on year quarter spike. It could just be a quarterly variation, a low quarter the year before and a high quarter that year,” Platter said, explaining the sudden surge of inquiries in late 2018.

“We think this year we are looking at flat demand from Chinese buyers for Australian property.”

Chinese buyers living in Australia are given more flexibility and can buy any property they want.

The rules are more stringent for offshore buyers.

The Foreign Investment Review Board requires foreign buyers only to buy new developments.

“That’s why you see a lot of Chinese buying new apartments, new townhouses, new houses and land packages. Chinese buyers are very interested in new property as a rule, and then these rules just push them further in that direction,” Platter said.

Despite the rules, Chinese spent US$180 billion on global real estate in 2018.

“We think of Chinese demand as being huge, but the actual deal flow isn’t as great. that’s because there are these artificial barriers keeping buyers from actually making these deals.”

One of those barriers is capital controls, which makes it harder for Chinese people to move money out of the country. These rules have tightened since 2016, which is why “we think there has been a big decline in Chinese transactions here in Australia.”

Australia is still very much on the map for Chinese buyers. In 2018, Chinese buyers spent $32 billion on Australian real estate.

“It went down in the most recent year, but (Australia is) still 20 per cent of all foreign buying, the biggest share by far.”

Why is Australia such an attractive place for Chinese property buyers?

Platter says Chinese people have a reputation for saving and generally save 50 per cent of their income on a national average, but have limited options for investment.

“In the banks, you get a very low interest rate because they are kept artificially low by the government.

“If you put it in stocks you get a very bad return because it was the worst performing stock market in 2018 in China.

“If you put it in real estate it’s very hard to invest because the government is squeezing the real estate market to keep investors out.”

“And if you put it in equity or some alternate investment, you get into trouble because the government is investigating these funds.

“Australian real estate looks like the best investment in comparison,” Platter said.

What does this mean for the Australian property market?

2019 will likely see the same amount of buyers and money flowing in as last year, Platter said.

Juwai.com predicts Melbourne to continue to be the top destination for Chinese property buyers.

“Melbourne gets about $4 [for] every $3 that Sydney gets of Chinese investment.

“A developer I was speaking with today in Melbourne is building townhouses 25 minutes from CBD.

“They start in mid $600,000. Whereas in Sydney you pay $1 million for a two bedroom apartment.”

 

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The US-China trade war is “scaring some investors” and could drive more Chinese buyers on our shores.

“We are seeing some Chinese investors saying ‘I’m not going to invest in the US, I’ll go to a similar market where I can get a similar return but with a safer profile.’”

Students, workers and entrepreneurs who are finding it difficult to gain entry into the US because of President Trump’s visa policies could shift to Australian universities and jobs, Platter says, which would drive up demand.

“More Chinese buyers could mean higher prices in certain segments, fewer could mean lower prices in certain segments,” Platter said.

 

SOURCE:  https://www.yourmoney.com.au/real-estate/is-the-chinese-love-affair-with-aussie-property-over/

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