Most of Meriton’s apartment buyers come from China and most fund their purchases locally. But local borrowing has become more difficult as the banks, prodded by APRA, seek the security of more documentation and higher deposits.
Many are already locked into off-the-plan contracts to buy apartments and may struggle to settle the purchases.
“The banks had a very good name with the Chinese but now they cannot trust them,” says Triguboff.
The Highrise Harry cry rolls on, this time from Robert Harley, who seems to have learned nothing about trusting rent seekers from his disastrous McGrath spruik:
“The problem is they don’t know how much the banks will give till the end.”
Triguboff says the banks now ask Chinese buyers to produce their tax statements. “Lets see how that goes,” he smiles.
I am shocked – SHOCKED – that the banks are now checking tax returns!
As MB has stated many times recently, Highrise Harry’s solution, of not checking tax returns for Chinese buyers, is ridiculous. If you have a price bubble and building glut owing to overly low lending standards, which is also giving you Dutch disease by keeping your currency too high, then the answer is not to double down on the problem. It is fix the problem, by prompting the banks to check tax returns.
In due course as the bubble deflates that will lower interest rates and the currency to offer some padding for the landing that you cannot now avoid.
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