Chinese property buyers are GONE

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).

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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.

Comments

    • They’ll be back! After Aussie property collapses they’ll be hoovering up the bargains.

      • mark777MEMBER

        THEY will have a lot of losers themselves. Plus Trump will bury them, they crash too

      • 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.

      • 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.

  1. Would love to see the graph go negative as they dump their “investments”, just dreaming.

    • deustchedropper1

      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

      It will happen when China experience a bust, similar to what happened with Japanese investment in the late 80s/ early 90s.

  2. BoethiusMEMBER

    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.

    • Excellent and very very likely point.

      Their money is safe here, not China. Even at a reduced amount, they will buy and hold.

      • 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

      • 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.

  3. 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

    • If they QE out again, my cash money becomes worth less. So that’s not safe either.

      Gold? Bonds? Blue chip?

      • 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

      • 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.

      • I’m not sure of that answer C3PO but we need to start a robust discussion
        Martin “please explain”

      • @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.

      • 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.

      • @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.

      • 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

      “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…

    • 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).

      • 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.

    • You’re dreaming

      A pleasant dream, but a dream nonetheless

      The currency will take the pain instead

    • bcnich why not etf usd listed on asx. Could comsec somehow get embroiled if cba gets in trouble?

    • “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.

  4. They’re still buying one fifth of the new build crap in Queensland. Let em buy it all. It’s utter garbage.

      • 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

    • 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

  5. 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.

  6. 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.

    • 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.

    • 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

    • SupernovaMEMBER

      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.

      • 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

        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?

  7. 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).

  8. reusachtigeMEMBER

    LOLOLOLOL!! #fakenews and #alternativefacts! I see Chinamen everywhere still.

  9. Mr SquiggleMEMBER

    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

    • 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.