I wrote last month (here and here) how there appeared to be a “hidden Chinese pump” driving-up Melbourne property prices.
This view was driven by the fact that Melbourne dwelling values have diverged massively from housing finance commitments, which runs counter to historical experience (most Chinese pay with cash):
As well as the latest NAB residential property survey, which shows that foreign demand remains particularly high in Victoria:
The Australian also reported last month that Melbourne had “cemented its status as most popular city in Australia for Chinese buyers of residential real estate”, according to two new sets of data, although it did not distinguish between new and established property:
Yesterday, The Australian ran an article on the extreme measures the Chinese take to funnel their money into Melbourne property:
Chinese investment will continue to flow into Australia’s housing market despite tighter mainland capital restrictions, with real estate portal Juwai predicting levels will peak again despite a near-10 per cent fall in inquiries earlier this year.
Inquiries on the website for Australian property from potential Chinese buyers have fallen 9.7 per cent in the first half of this year compared with the first six months of 2016, according to a Juwai.com spokesman.
“It’s down on last year, but it’s still going to be the second or third biggest year (for inquiries),” the spokesman said.
“It’s like going through the foothills — there are more peaks ahead.”
The comments come as Bloomberg reported that capital restrictions on money flowing out of the country had not stemmed Chinese interest in offshore investment. It quoted a Shanghai restaurateur saying he planned to carry money to Melbourne in a suitcase so he could buy a local investment property.
Shanghai restaurateur David Hu said he was nervous about wiring money to Australia for a home purchase because of China’s crackdown on currency outflows, Bloomberg reported.
The 61-year-old told the news agency that he intended to carry about $85,000 to Melbourne this month in a suitcase. The money was final payment for a deal struck last year.
“Buying a property abroad was and is still workable,” said Hu, though he described the process as a “lot more troublesome” these days.
Chinese applying for $50,000-a-year foreign exchange quotas must sign pledges that the money won’t be used for real estate. The regulation was brought earlier this year…
While Juwai is no doubt talking its own book, there is no doubt that Chinese investment is having a significant impact on property values in Melbourne (as well as Sydney), thereby helping to price-out younger Australians.
All of which highlights, yet again, why the federal government needs to properly enforce its rules banning foreign investment into existing real estate, as well as implement global anti-money laundering rules for real estate gate keepers, as was promised more than a decade ago.
Now watch as the government continues to ignores the issue.
