After the latest FIRB Annual Report for 2015-16 showed exploding investment in Australian residential property by China, Treasury Secretary John Fraser has stated that Chinese investment has plunged so far in 2016-17, due to credit curbs implemented in China. From the Herald-Sun:
Treasury secretary and Reserve Bank board member John Fraser says there has been a steep fall in applications since the Chinese government moved last year to slow capital outflows and reduce credit availability.
Foreign investment applications for residential housing in Australia totalled 40,000 last financial year, Mr Fraser said on Wednesday.
This financial year, that number was expected to fall more than 60 per cent to about 15,000, he said, “partly reflecting” the change in Chinese credit markets.
The revelation follows warnings from property buyers’ advocates in recent years that strong foreign demand for Australian property has contributed to a price surge in some cities.
Mr Fraser was speaking after Moody’s Investors Service downgraded its credit rating on China by one notch, citing the likelihood of a material rise in debt across the Chinese economy…
Its growth had been fuelled by credit, he said, but “Chinese authorities are clearly aware of the risks attached to this”.
“They are now implementing measures to maintain stability and this has included measures to reduce the outflow of capital from China,” he said.
“In turn, this has contributed to a softening of Chinese investment in Australian residential real estate since late 2016 — although interest in business investment remains strong but, even here, we are seeing the impact of tighter credit availability.”
Good news, given the Chinese investment has been concentrated in the bubble markets of Melbourne and Sydney: