Share on Facebook Share on Twitter Share on Reddit + - Chinese property buyers are GONE By Houses and Holes in Australian Propertyat 12:15 am on July 13, 2018 | 76 comments From NAB’s quarterly property industry survey yesterday: -Survey-Q2-2018 NAB’s survey results have highlighted to a trend decline in foreign buying activity in recent quarters resulting from policy changes in China on foreign investment outflows and tighter restrictions on foreign property buyers in Australia. In Q2 2018, there were fewer foreign buyers in the market for Australian property, with their market share dipping to 9.6% (10.9% in Q1 2018) in new housing markets and to 4.8% in established housing markets (5.7% in Q1 2018 and their lowest share since Q1 2012). In established housing markets, the share of sales to foreign buyers fell in all states. They continued to be most active in VIC but their market share of total sales fell to a 4-year low of 6.2% (8.2% in Q1 2018). The decline was even more pronounced in NSW, where their market share fell to 4.8% (5.4% in Q1 2018) – the lowest level in over 6 years. In QLD, foreign buyers accounted for 5.4% of total sales (5.6% in Q1 2018), while in WA their share fell to 2.2% (4.7% in Q1 2018). erty In new property markets, the share of sales to foreign buyers fell in all states except QLD where their share jumped to 22.8% (11.5% in Q1 2018). This may have reflected anecdotal reports of increased Chinese property investment associated with record numbers of Chinese student enrolments in the state. In contrast, the share of foreign buyers fell to 11.7% in VIC (down from an average of 14.4% since the survey started), 7.4% in NSW (from an average of 10.2%) and 4.6% in WA from an average of 6.8%. The boom is over and with a falling CNY more likely than not to need further capital controls it will probably drop some more. It should never have been allowed to happen. Full report. Share on Facebook Share on Twitter Share on Reddit + - YOU MAY ALSO BE INTERESTED INBust over but no boom ahead for house pricesVia Michael Janda at the ABC: The game isRack it and stack it cowboys create apartment crisisNSW's peak strata body warns that SydneyChinese capital outflows accelerateVia Goldman: ...as Goldman points out, amid theAustralians have bet the house on rising property prices Above is an interesting graphical summary of Comments Ino July 13, 2018 at 12:28 am No, they’re not ‘gone’, they’re just ‘relaxin’ ‘… MarcusP July 13, 2018 at 7:35 am They’ll be back! After Aussie property collapses they’ll be hoovering up the bargains. mark777 July 13, 2018 at 7:45 am THEY will have a lot of losers themselves. Plus Trump will bury them, they crash too NikolaMEMBER July 13, 2018 at 8:41 am If there is full on trade war they will be back with big bags of cash. This time around they will be willing to pay >50% in fees as long as they get something out before the total collapse of the Chinese economy. Unless China manages to impose real tough credit controls and scan every Chinese arse at their airports. Stephen July 13, 2018 at 10:30 am I kinda disagree. If our dollar gets hammered then there’s really no reason for them to come. Plus currency devaluation will wipe out a lot of those who are here to remit money back home. This is why I think even the incrementally tiny interest rate rises are wiping a lot of them out at the bottom end. The $10hour Indian and Chinese who have mortgages or renting now have to cough up another $70 a month. That’s really noticeable for them. That’s on top of all the new arrivals who got PR and are now struggling to refinance or get loans in the first place. I look at it as 1000 cuts not the overnight disaster some bears are hoping for. Happy to be proven wrong though. IvanMEMBER July 13, 2018 at 5:13 am Would love to see the graph go negative as they dump their “investments”, just dreaming. deustchedropper1 July 13, 2018 at 7:04 am qld bought in foreign infestor tax as of July 18 I thought. Might explain the rush to buy in Q1 and Q2. Interesting to see what happens next Q. Ronin8317MEMBER July 13, 2018 at 9:29 am It will happen when China experience a bust, similar to what happened with Japanese investment in the late 80s/ early 90s. BoethiusMEMBER July 13, 2018 at 5:25 am Is there data on the *stock* of foreign ownership of Australian housing? The above data appear to be flow data (shares of purchases that are foreign). We need to also know the shares on the sell side to know whether there has been a net reduction in foreign ownership. If the foreign buyers have a low propensity to sell, then the accumulation of the reported purchase rates since Q210, together with typical turnover rates for established houses and rates of addition of new houses to the established stock, suggests we might now have a sizeable foreign owned share. I do not think we can infer from the figures reported above that this share has fallen. Esss July 13, 2018 at 6:50 am Excellent and very very likely point. Their money is safe here, not China. Even at a reduced amount, they will buy and hold. bcnichMEMBER July 13, 2018 at 7:07 am Eess I said a while ago gold is going much lower with strong USD I think Aussie Gov bonds staying short just under 2% MB disagrees but I’ve been really bullish ASX I really liked GBP in high 50s. Think 55/56 still Think when Eur collapses GBP will be a safe haven and you can’t not hold some USD GOLD I think will be a buy but much lower = think we will see well under $1,000 Arrow2MEMBER July 13, 2018 at 9:45 am Esss – wrong. Chinese want to get money out but Australia is not the smart destination any more. US is. – Aus property is falling and so is the AUD (compared to USD) – that’s two ways to lose money – but US property is rising, and so is USD. Double win. – more broadly, the Aus economy is too closely tied to China. If China crashes so does Australia. Moving money here in a China crash is dumb. By contrast the US economy is strong. – Aus taxes and stamp duties on foreigners are also going up. It’s not as friendly as it once was. So yes Chinese money will leave China. It just won’t come here. bcnichMEMBER July 13, 2018 at 5:25 am They’re gone just like the japs but wait 2/3 years when not only are they gone when the Chinese Ponzi scheme unravels they’ll be sellers of a Aust property As good as property was in Aust to own last 35 years it will be the opposite fir next 35 years You’ll be a LOSER to own a property Body Corp increases Council rate increases new land tax levies falling prices have higher interest rates It will be like an anchor hook it to the house and the other end to your neck and throw the house in the ocean you’ll be dragged down the bottom of the ocean STAY LIQUID don’t own any property renters will get the best bargains in next 20 years Renters will be KING We are heading into a liquidity crisis next 5 years as QE dries up everywhere Stay liquid CASH EQUITIES In 1989 they were goung to have Japanese street signs and they disappeared Esss July 13, 2018 at 6:52 am If they QE out again, my cash money becomes worth less. So that’s not safe either. Gold? Bonds? Blue chip? MarcusP July 13, 2018 at 7:34 am The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017”, gives the Government and APRA new discretionary powers to confiscate bank deposits. Here’s what an APRA whistleblower said https://www.aph.gov.au/DocumentStore.ashx?id=5b260353-335d-41ad-a0eb-a452ba702e3c&subId=562229 By STAYING LIQUID you will be bailing out the property owners. Get you AUD out of the country if you really want safety. Peachy July 13, 2018 at 7:49 am Enough with these shrill lies already. bcnichMEMBER July 13, 2018 at 8:46 am Marcus I have been very concerned about this and I even emailed Martin North last week after he wrote bail in bail out article I’ve sold everything and I have a large amount of USD and GBP but they are in an Ozzie big 4 I used to work at Morgan Stanley and I want to put my USD there but they charge large fees to even just have a USD acc I do have cash in bank but not much Do I just put into a cash ETF or is that money just in the bank too I am really happy that phil Lowe is deleveraging I think I need to park in defensive yield equities because I can’t see more than 10/15% downside and you get 5% yield I don’t trust government but Australia does have low public debt so I’ve stayed short Aussie bonds Can we chat on the phone sometime. I’d love to chat MB YOU NEED TO START DISCUSSING THIS TOPIC. Fxxxx return it’s about not losing all your capital when this whole thing goes down Marcus chat ???? I’m really concerned about this and I was hoping Martin north with MB can start discussing this topic C3POMEMBER July 13, 2018 at 9:04 am I agree bcnich it is a topic well worth exploring. However from MB’s perspective haven’t they pretty much built the MB Fund with this in mind? That means if there is such an article it treads a fine line between discussing your concerns and looking like a blatant self plug. Disclosure I have $$s in the Foundation fund. bcnichMEMBER July 13, 2018 at 9:08 am I’m not sure of that answer C3PO but we need to start a robust discussion Martin “please explain” MarcusP July 13, 2018 at 9:17 am @peachy: Why would the government enact this legislation if they did not want the option to confiscate bank deposits? Read the linked pdf, and you’ll see that APRA’s mandate was steathily changed from protecting depositors to keeping the banks healthy. @bcnich: You are right. It is an option worth having. Hopefully we never need it, but Australia tends to protect those who borrow money, rather than those who save it. I’m not sure why MB and Martin North haven’t discussed the topic, perhaps they have in the past? It is worth noting that actions speak louder than words, and the MB Fund is heavily invested overseas. Peachy July 13, 2018 at 9:36 am Marcus 1) I’ve read the legislation. It is a very very long bow to draw to say it’s there to allow depositor bail-in. Thats the technical response. 2) the practical response is that it doesn’t matter whether the law allows bail-in of depositors or not. They can always pass a new law that allows it, in a crisis. But if they do that (and p!ss all over the $250k deposit guarantee in the process), they will wreck the Australian banks because for the next 20 years nobody will deposit with them anymore. So they won’t do it. MarcusP July 13, 2018 at 9:40 am @peachy. Thanks for the reasoned reply. I don’t see how the government can get out of this mess, unless they try to inflate the problem away which will make a mess of its own. In Greece and Cyprus depositors took a haircut, and people still use the banks, perhaps they have no choice. In Hungary private super funds have been used to top up the state pensions. MrMedved July 13, 2018 at 10:03 am It’s easy to say, oh they won’t do this, or they won’t do that, but when was the last forced bank holiday in Australia? Or the last bank run? People do unpredictable things in a panic or crisis. It is prudent to have an offshore account and some cash stuffed under your pillow. Remember this – Deposits: your asset, the bank’s liability. Credit: your liability, the bank’s asset. What asset do you think will be protected in a financial crisis? Jumping jack flash July 13, 2018 at 8:39 am “They’re gone just like the japs but wait 2/3 years when not only are they gone when the Chinese Ponzi scheme unravels they’ll be sellers of a Aust property” I was very young at the time but still I remember all the coastal holiday resorts abandoned by the Japs in the mid 80’s around this area. Many just stayed empty and crumbling for years, possibly a decade, because they couldn’t locate their owners. Other places that had expanded due to the frenzy and resulting property price rises took a big hit when all the money that had flowed in, flowed out just as quickly. Just saying… Esss July 13, 2018 at 11:54 am It’s very different this time. Our migration is so ridiculously high, with construction slowing, we will very soon have enough migrants to fill the places, even the abandoned ones you speak of. Also, China still MAKE EVERYTHING so money will still be sent there, constantly, making them richer. Robert July 13, 2018 at 3:12 pm Also, China still MAKE EVERYTHING so money will still be sent there, constantly, making them richer. That’s a way that they are completely the same to Japan in 1989, not different. https://www.news.com.au/finance/economy/world-economy/why-the-made-in-china-tag-may-soon-cease-to-exist/news-story/ab31ca2c00a9b2a8200ce913a013a1e0 Arrow2MEMBER July 13, 2018 at 9:50 am Bcnich in terms of where to put your money – consider a Charles Schwab Aus account for some USD holdings. You can buy bonds equities etc but also the liquid cash in the account is US Govt guaranteed up to USD 100K (I think, or could be more). T July 13, 2018 at 11:23 am Also, a transferwise account is super easy to setup. And cash movements take 24 hours, and fees are low. No use for trading purposes, but very useful to move into different ccy’s as needed, if what you are trying to do is NOT speculation. Coming July 13, 2018 at 9:57 am You’re dreaming A pleasant dream, but a dream nonetheless The currency will take the pain instead matthewMEMBER July 13, 2018 at 10:49 am bcnich why not etf usd listed on asx. Could comsec somehow get embroiled if cba gets in trouble? marked64 July 13, 2018 at 11:10 am HSBC has a multi currency account. Cheap. Super Phoenix July 13, 2018 at 12:55 pm “As good as property was in Aust to own last 35 years it will be the opposite fir next 35 years” Are you assuming that Straya will manage to avoid a crash for the next 35 years? Not likely. Andrew July 13, 2018 at 5:26 am They’re still buying one fifth of the new build crap in Queensland. Let em buy it all. It’s utter garbage. Houses and HolesMEMBER July 13, 2018 at 5:33 am Given the wider data I suspect that’s a glitch. Perhaps one large project or something similar. bcnichMEMBER July 13, 2018 at 9:05 am MB forget about your 2% returns Please start helping with a plan so we don’t lose 70% of our capital like Marcus P talks about Simon July 13, 2018 at 7:52 am When Latham gets in there will be an audit of illegally purchased properties by foreigners, which will be confiscated and sold back into the domestic market. Lololol Jumping jack flash July 13, 2018 at 8:43 am Pffft.. Good luck with that! Les July 13, 2018 at 6:43 am What a disgrace – those levels in the first place. Especially VIC. It should be zero. Apart from a very tiny group in Australia consisting of property developers, some real estate agents and the winnets associated to those groups; does any voting Australian actually want foreigners having the ability to legally purchase and own real estate in Australia? There is no long term benefit to just about any Australian. haroldusMEMBER July 13, 2018 at 9:24 am Excellent use of “winnet”. Ino July 13, 2018 at 10:20 am What’s a “winnet” and how does one get in possession of one “winnet”? haroldusMEMBER July 13, 2018 at 10:52 am https://www.urbandictionary.com/define.php?term=winnet Ino July 13, 2018 at 12:03 pm Aaahhh…. sh*t …. Peachy July 13, 2018 at 6:46 am Chinese are now probably just trading their Australian property offshore, between themselves, to avoid the 12.5% CGT withholding tax. That Property still is unavailable to Australian Buyers. hopefully the marginal bid has decreased though. I take this with a pinch of salt… we will see. MrMedved July 13, 2018 at 8:24 am If they received good advice the property would be held by a trust, where the beneficiaries are easily and opaquely transferable. So it is possible this does happen, though doubt it would occur for the majority of properties that change hand. bcnichMEMBER July 13, 2018 at 8:49 am Peachy this is a reply to above your reply to MarcusP Enough with these shrill lies If you really think that MarcusP is completely wrong You have just shown you have NO IDEA what you are talking about Peachy July 13, 2018 at 8:56 am Yeah, ok man. bcnichMEMBER July 13, 2018 at 9:03 am Peachy this is goung to be the great Australian disaster of the 21st century GavinMEMBER July 13, 2018 at 10:41 am I hope so… Looking forward to Tracey Grimshaw segments on it. SupernovaMEMBER July 13, 2018 at 2:32 pm Pretty sure every property thats sold (date of exchange of contracts) from 1st July 2017 needs a clearance certificate from the ATO, otherwise settlement cannot proceed. Foreigners have to pay CG or lose the property. MrMedved July 13, 2018 at 2:48 pm If you change control of a trust you don’t need to change title to the real estate/property. No reporting, zippo. That’s how the real world works. SupernovaMEMBER July 13, 2018 at 3:10 pm Tks Mr Medved, always a keen student as to how the real world works: Re Property Trusts: Who would want control of a trust/s with significant declining value? I mean are money looters (launderers) that desperate their prepared to lose a great deal of what they loot? Robert July 13, 2018 at 7:02 am Dragged by better half to new Melb CBD apartment viewing. We asked about ratio of investers vs occupiers, as it’s not pleasant to live in a vertical ghost town. Agent said, yes, this is third of 4 towers. First was nearly all O/S investors, 2nd was lots of investors but not foreign, now investors are going and it’s mostly occupiers. They haven’t had an O/S investor sign on since July last year (stamp duty change). They’ve even had to change layouts to make them attratctive to people who intend to live in them (surprisingly close to the words she used). Les July 13, 2018 at 7:14 am Cheers. Interesting to hear Robert. Melbourne CBD was becoming a 3rd tier Chinese city. GGMEMBER July 13, 2018 at 8:35 am Too late. Already happened haroldusMEMBER July 13, 2018 at 9:25 am Stood in Strathfield square near the train station recently? reusachtigeMEMBER July 13, 2018 at 9:40 am ^ You’re getting your types of Chinamen mixed up. Those ones are Korean! That’s like saying “Stood in Cabramatta mall lately” in the 1990s when those types of Chinamen were actually Vietnamese. haroldusMEMBER July 13, 2018 at 9:53 am Nah Korean = Rhodes GavinMEMBER July 13, 2018 at 10:44 am @Haroldus I often have to choose between restaurants in Five Dock, Drummoyne, Concord and Burwood. Burwood is the pits. So busy and people everywhere it’s like HK compared to the others. I would not want to live there with all the high rises etc.. MrMedved July 13, 2018 at 10:06 am Just a thought, If overseas investors own the overwhelming majority of property, and things turn to shit, will they continue to pay body corporate fees? Are they at risk of turning into the decaying ghost cities in China? [email protected] July 13, 2018 at 11:41 am https://www.youtube.com/watch?v=XopSDJq6w8E&t=6s Robert July 13, 2018 at 1:40 pm Didn’t talk about body corporate fees, but big sell on shared facilities, so they can’t be nothing. Can’t imagine that they will be allowed to accrue over too long a period without effort to recovery action, given contractors maintaining the common areas will need to be paid. [email protected] July 13, 2018 at 11:48 am Yes Robert, the Chinese are only intersted in rising markets. Just watch them all disappear into the woodwork off the face of the earth as our and other markets tank. Lot of lenders will be left with rotting sky kennels and no one to resell them to, ah? hekkers July 13, 2018 at 11:52 am I put it to my mates recently; what would happen if chinese students all of a sudden feel out of flavour with Australia. Who remaining, would want to live in those dog boxes in the CBD? Melbs is dead set phucked. Utter sh*thole compared to 10-15 years ago. hekkers July 13, 2018 at 11:55 am In other news, car jacking and home invasions in your area will not effect your home’s value: https://www.theage.com.au/melbourne-news/crime-has-no-impact-on-property-prices-in-melbourne-report-20180712-p4zr2v.html Can’t make this BS up… Esss July 13, 2018 at 11:57 am Agreed, many of those city ones are tiny garbage. No Aussie wants to live in them. They’re most student accommodation. Terrible. I can’t imagine the students decreasing much though. Prometheus69 July 13, 2018 at 12:21 pm Yeah …. the Worlds Most Livable Shithole. Robert July 13, 2018 at 1:38 pm I can’t imagine the students decreasing much though The first tower is sold, not completed. So student numbers need to continue to rise at current pace to fill them all, not simply fail to decrease. And the number of Chinese students on the planet continues to fall. http://www.chinadaily.com.cn/beijing/2016-06/08/content_25649119.htm reusachtigeMEMBER July 13, 2018 at 8:09 am LOLOLOLOL!! #fakenews and #alternativefacts! I see Chinamen everywhere still. tripsterMEMBER July 13, 2018 at 8:53 am No doubt this is what is causing price falls, nothing else haroldusMEMBER July 13, 2018 at 8:55 am don’t tell gramus GavinMEMBER July 13, 2018 at 10:44 am Lol where is he? The Traveling Wilbur July 24, 2018 at 9:23 pm I miss The Lorax. : ( [email protected] July 13, 2018 at 11:40 am Plenty of bargains to be had in China……. although they will fall down around their ears….he he he he he https://www.youtube.com/watch?v=XopSDJq6w8E&t=6s Mr SquiggleMEMBER July 13, 2018 at 1:17 pm I was talking to a neighbour who sold out of a residential home in Toorak for $4m 4 years ago to an Indian. The Indian bulldozed the home and spent a further $4m on a new schmick 2.5 story home. He’s just sold to some Chinese for $16m. Now Indians and Chinese are buying/selling our land amongst themselves. No Australians involved anymore Peachy July 13, 2018 at 2:22 pm It’s “the market” mate. Feck Australians, what do they matter? Hail the market. MrMedved July 13, 2018 at 2:52 pm And that’s exactly why the government doesn’t want AML sniffing around property.Too many $$$ involved. But if I wanna purchase over a thousand bucks of forex it gets reported. Yup, real smart.