From the AFR, Ausin Group, which offers property and mortgage broking in Australia to Chinese buyers:
…forecasts $1.5 billion ($US1.4 billion) in sales of new residential properties in the year ending June 30, compared with $900 million over the previous 12 months, Sydney-based managing director Joseph Zaja said in an interview on Tuesday. The value of mortgages the closely held company arranges through Australian banks is expected to climb to $500 million in the 2015 calendar year, he said.
When Zaja and a partner based on the mainland, whom he declined to identify, first set up Ausin in 2009, banks would only finance developments where less than 30 per cent was sold to overseas buyers, he said.
“Now, that’s up to 100 per cent in some cases,” he said.
Blowed if I know why. Throughout the GFC I worked as a consultant in this area and I can tell you from experience that the offshore demand for Australian property collapsed. Banks radically jacked the proportion of local sales required of developers to get funding and for good reason. They had reams of supposedly committed offshore buyers evaporate into the ether.
Exactly the same thing will happen at the end of this cycle only it will likely be worse as the Chinese property market also falls and many loans from China are also repatriated.
In other words, this is not Chinese demand that is here to stay, this is Chinese demand acting pro-cyclically and exacerbating the volatility of the property cycle.
I look forward to seeing Ausin performance when the tide goes out.
