From Gotti today:
The first shift is that the level of Chinese buying of Sydney apartments has fallen dramatically. The largest Sydney developer, Meriton’s Harry Triguboff, estimates that in the last month or so Chinese buying has halved.
…But just as everyone began to prepare for the resulting calamity, a second dramatic shift has taken place in the last few weeks: There has been a surge in Australian buying of both existing and ‘off the plan’ apartments.
The increased buying has been so sudden that there has not been time to fully analyse the trend, but it seems that two forces are driving it.
First, the Coalition’s retrospective (see footnote) decimation of superannuation as a savings mechanism for up-and-coming executives and salary earners has turned Australians towards negative gearing as a savings mode.
And, secondly, this trend was accelerated by the fall in interest rates as well as the signal by the Reserve Bank that if inflation remains at current levels or moves lower, further interest rate cuts would be in the pipeline.
There is no evidence of a sudden “surge” in local buyers and citing a Budget and rate cut that are a few days old is silly. Mortgage finance is falling at a good clip and the only leading index we have from Core Logic is the same.
What there has been is a concerted push by banks to lower owner occupier lending standards in the wake of investor macroprudential curbs. I have seen this first hand as income thresholds have been dropped and prime borrower criteria lowered. But this is now months old.
It was always going to happen so I hope [sarc] that APRA is aware of it and prepared to extend macroprudential like the RBNZ if I prove to be wrong that the downdrafts now in the market will be enough to offset the bank’s new push.
