Chinese losing appetite for Australian property

Chinese losing appetite for Australian property

17 August 2017

Chinese property buyers are losing their appetite for Australian housing as regulators in both countries clamp down on foreign investors, reports the AFR.

Chinese buyers make up about 80 per cent of all foreign property purchases in Australia. However, investors have grown wary after being hit by Beijing’s tightened capital controls, local banks restricting lending, and growing fears of an over-supply in the capital city apartment market.

“It was just 12 months ago that Australia was the hottest thing at Chinese property exhibitions,” said Scott Kirchner, a Shanghai-based director of Beller Group, a real estate agency, told the AFR.

“Now Australian developers are not up here pushing projects and Chinese agents have no appetite for Australian property.”

Last week, Asia Real Estate Intelligence Source, Mingtiandi, reported that China’s Dalian Wanda Group had caved in to pressure from Beijing to crimp its offshore expansion and reduce debt. The company confirmed it was selling its stakes in real estate projects in the UK, US, China, and Australia. Wanda’s Australian assets included apartments and hotel developments in Sydney and the Gold Coast.

Other Chinese entities and individuals are facing demands to unwind and halt offshore investments in a bid to stop capital flight and bolster the value of the yuan.

“Some Chinese buyers have clearly shifted their focus from Australia to other countries. Australia has lost market share,” said Jane Lu, the Australian head of Chinese-language property portal Juwai.com.

Australian property searches on Juwai.com were down one-third in the first half of the year, compared to the second half of last year.

“Chinese capital controls have contributed to the constrained environment and made inexpensive countries like Thailand look more appealing,” Ms Lu said.

While Chinese purchases in Australia could be down between 10 and 30 per cent this year. Ms Lu stressed this should be seen in the context of a record 2016 for Chinese buyers in Australia. Even if Chinese buyers dropped by a third in 2017, she said, it still could be the second-best year on record.

“Australia is still secure in its position as the second-most popular country for Chinese buyers.

“When you compare the price of similar property in Australia and China, Australia still offers good value. It looks cheap to them,” Ms Lu said.

According to figures compiled by Credit Suisse, Chinese buyers make up about 80 per cent of all foreign property purchases in Australia.

Since 2007, Australia has received $US90 billion in Chinese investment, putting it second only to the US, says KPMG.