John Fraser: Chinese buyers deserting housing market

By Leith van Onselen

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:

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Comments

  1. reusachtigeMEMBER

    #fakenews & #alternativefacts !! Chinamen have just learned how to better stay under the radar of our laws when buying our property. Boom times ahead in Chinamen housing investment. They love it here because we have laws.

    • AlbyManglesMEMBER

      rofl
      “They love it here because we have laws”
      that’s some of your finest well done

      • Original John

        A friend who is a senior official from Beijing has always commented that he does not understand his countryman’s desire to move to Australia, the UK, US or Canada as the invasive monitoring, legal restrictions on what you can do (think draconian strata rules etc that don’t exist in China), noise restrictions, road rules, costs associated with employing nannies, slaves I mean servants, drivers etc makes China a much better place with money and you can still holiday here.

      • They want to leave because the gains they’ve made a ill gotten, it’s the swiss bank account equivalent, this is why the Chinese govt wanted that extradition treaty.

        Loan fraud in china is through the roof, this is why rating agencies have started downgrading.

      • AlbyManglesMEMBER

        yes for sure if your wealthy, a business owner I visited regularily in Suzhou years ago owned a massive long wheel base S class merc that was very awkward to drive in traffic, I asked why the hell the big car, he said he could park it anywhere and not get a ticket. the s class maybe getting more common now, I haven’t been back in awhile. it got so much respect back then he could just throw it into on coming traffic at a set of lights and all the oncoming cars would part like the red sea and let him turn

      • >They want to leave because the gains they’ve made a ill gotten,
        Luckily Aussie Real Estate Agents and their lawyers are specifically exempted from money laundering laws.

        Ain’t lobbyist supported democratic laws great?

    • It’s was never “our laws” and (lack of) their enforcement that could have them worried, but their own (Chinese) laws.

    • You forgot #cleanAir and #privateSchools, everyone wants to live in Australia. #DownWithPandas and #UpWithKangaroos

    • can’t you afford to become a member?

      (member in the sense of membership, not in the sense of the tool you use in your many relations)

      • Paying for membership would be against reusa’s leaner not lifter philosophy. This is an exquisite aspect to his overall satire, noticed only by a few. Further, $199 buys a deal of blow – why make such a foolish and irrational sacrifice?

    • GeordieMEMBER

      Have you tasted metho? Best give it a go now and start acquiring a taste for it before you’re forced off the Grange.

    • yes they do. and from martin armstrong: Great bubbles unfold only when foreign capital is pouring into a domestic market.

  2. The Patrician

    “has plunged so far in 2016-17”
    “has been a steep fall”
    “was expected to fall in 2016-17”
    “has contributed to a softening ..since late 2016”
    Where is the data John?

  3. The Chinese have already lost their testicles in the U.S., are about to lose more of them in Canada. If they continue buying down under, their scrotum bags will be gone as well.
    How on earth do you educate mugs of this world?

  4. shouldn’t that read “known” Chinese investment.

    Like when the guy who sits 4 desks in front of me owns 4 Perth properties paid for by his wealthy Chinese parents. Bet thats not in his “known: Chinese investment breakdown.

    • How is that working out for them ? Arre they recent buyers or are they getting skun?

      • He lives in the applecross house and complains the swiming pool is too small. His GF lives in the apartment in south perth.
        As far as i recall the other two houses sit empty since day one. No idea where they are located.
        I doubt somehow they care too much about the “value”.

      • have you thought about calling the authorities angry man ? not the australian ones, the chinese (through the embassy). even without an extradition treaty Operation Fox Hunt would be interested in finding their parents back in china

  5. It has to be true

    Come on folks, head out to auctions at Chatswood and Glen Waverley this weekend and see how far you get

    Not fking far I bet

  6. File this one under “Fake news” (as anything else produced by the makers of “the budgets of lies”).

  7. ““They are now implementing measures to maintain stability and this has included measures to reduce the outflow of capital from China,” he said.” – as of 1st July limit down from $50k to $10k and with that our RE bubble explodes.

      • Original John

        See my note below – previously limit for approval was approx. $50,000 USD for foreign currency transactions. Effective 1st July, this has been reduced to circa $10,000 USD. As per Bank of Jiangsu manager, Lianyungang branch (http://www.jsbchina.cn/EN/index.html)

    • Original John

      Devil’s in the detail – APPROVAL threshold has been reduced to $10K USD, as yet the yearly limit is still confirmed at $50K USD effective 1st of July (from bank source this morning, Jiangsu province). My contact does still believe there will be a change to the annual limit but as yet nothing official has been received.

      • BrentonMEMBER

        Indeed. It seems certain that if the $50k limit is insufficient to stem the outflow, then they will simply lower the limit and tighten further.

        It is only a matter of time before cashed up chinese begin to disappear from the demand stream in Aus, Canada and NZ.

    • BrentonMEMBER

      I think the annual 50k quota remains, but there will be a new mandatory reporting procedure on any overseas transactions of $10k or more

    • Scomo should look at adding a new clause to his budget: Allowance to help for home Chinese buyers. that will fix the deficit.

    • Does a bubble that suffers loss of internal pressure explode or implode / collapse?

      Anyway, pretty clear Chinese government will restrict flow of money out if they believe this is good for China.

      So…. would you but into Australian property if there was a risk you couldn’t service loan and could default and lose your money. If you wanted to get money out of China, better to buy something you owned outright and could keep if the tap was turned off. Not a single illiquid huge asset that requires a 20 + year commitment.

      Maybe Reusa is quiet because he is frantically selling everything. SELL SELL SELL

  8. This is one ugly irony. Being swarmed by Chinese to keep a bunch of white trash and white private school ponces in the big bucks.

  9. wasabinatorMEMBER

    Fake news. Chinese are still busy blowing up all western world property markets.

  10. KEY WORD = EXPECTED…
    “expected to fall more than 60 per cent to about 15,000”
    until I see the real I data I don’t believe a thing these clowns say.

  11. The Patrician

    lol
    That must be why the median Melbourne asking house price has increased by about $100,000 since January
    This public servant is actively deceiving the public

    • MediocritasMEMBER

      I, for one, always appreciate your buckets of freezing cold logic being poured over my head every time I get irrationally excited.

  12. Good…..fuck right off Chinese buyers.
    Don’t give the boomers what they want.

  13. Ahh China’s investment driven growth model reaching debt capacity. The demand out of China for M&A, property, commercial property and our general exports will seem to evaporate further over the next 2-3 years.

    • It ultimately will but the time is not now. The true Chinese correction has’t even started yet.