Poof! Chinese property buyers vanish

Via the NAB quarterly property survey:

The boom in Australian real estate sales to foreign investors has run its course, with NAB’s latest survey results continuing to highlight a decline in foreign buying activity resulting from policy changes in China on foreign investment outflows and tighter restrictions on foreign property buyers in Australia. In Q3, there were fewer foreign buyers in the market for Australian property, with their market share falling to a 7-year low of 8.1% in new housing markets and a survey low 4.1% in established housing markets.

The share of sales to foreign buyers fell in all states except VIC where their share rose to 13.0% (11.7% in Q2), but still well below the record highs approaching 33% in late-2014. The share of foreign buyers in NSW was unchanged at 7.5% but also well down from a high of 21.0% in Q1 2015. The share of foreign buyers in QLD also fell to 6.2%, down from 22.8% in Q2, to its lowest level since mid-2014. A similar trend is evident in established markets with the shares of sales to foreign buyers falling in all states. Property professionals in VIC reported the highest share of buyers in established housing markets at 5.5%, followed by NSW (4.5%), WA (3.7% and QLD (3.7%). Moreover, the share of foreign buyers has well fallen below survey average levels in all states.

It was neither a good time nor a long time.

Full report.

Comments

  1. Terrible news. If our flaming-dragon dog boxes went off with a good fireworks display they would have stuck around. Bad marketing. A free set of steak knives perhaps?

    • They are still here, even if the numbers of new buyers is down a little, it is not down by as much as the graphs show.

      They are smart, though, and are used to dodging laws. They have learned that by registering a local trust or company to buy the property they avoid the foreign buyers tax.

      • Exactly. I mean I have no idea but look at that spike, just in the last couple of quarters? What was that and where’s it gone?

      • Go to all the trouble of setting up a local trust just to buy property in a falling market with a falling currency?

        Ok then.

      • Have to agree with A2, clearly not smart, I would say they have no idea.
        Even their president, the one guy to rule them all, walked right into Trumps trap, and he’s an idiot
        Our pollies, are also dumb
        The whole world is full of dumb people

      • These land bankers seem to have had a change of mind. These houses were built about 2yrs ago, big security signs were slapped on as soon as complete & they have been empty since. But a couple of weeks ago the builders came back & are fixing up, for sale I guess … hope.
        5 Isaac St, Peakhurst Heights
        https://goo.gl/maps/ZRRuwLuiXws

      • Keep money in totalitarian country were government changes the rules at will, or you have obtained it questionably. Even less smart.

      • Average dwelling in Sydney down around 6% in past 12 months. AUD down against the CNY about 8% over the same period. Good reasons there for the average retail speculator to pause. Add in transaction costs and you’re at least 19% down in a year.

      • These land bankers seem to have had a change of mind. These houses were built about 2yrs ago, big security signs were slapped on as soon as complete & they have been empty since. But a couple of weeks ago the builders came back & are fixing up, for sale I guess … hope.
        5 Isaac St, Peakhurst Heights, Sydney, NSW
        h ttp s://goo.gl/maps/ZRRuwLuiXws

      • Big RRR cut in China this week and a big corresponding spike in CoreLogic daily index for Sydney. You think the Chinese are not still here? Think again.

      • Jumping jack flash

        Mark777. You betcha. As I grow older it becomes completely apparent.

        Except, of course, for our esteemed, elected leaders. Those giant brains who know all the answers with their razor-sharp intellect and expert, talking-mouths are like gods to us mere mortal plebs. All hail the fearless, supremely patriotic leaders who live only to make Australia great!
        Live long and prosper, and all that.

    • Does anyone know a good non – Australian bank with a good branch network and decent internet-banking? I have an alt account with Citi, but their internet banking is lousy.

      • alwaysanonMEMBER

        I am happy with ING whose online banking and mobile app is great, refunds any ATM fees and allows using Australia Post for deposits. Or HSBC but I have not tried them yet personally.

      • pyjamasbeforechristMEMBER

        I think you’ll find the other “non-australian banks” are operating in Australia under an Australian ADI and just as much at risk as the big 4 to the Australian mortgage market, etc. And just as likely to be part of any deposit bail in that might be triggered.

      • Appreciate above comments – has anyone tried Rabo? They don’t do mortgage lending into the cities iirc, does anyone know?

      • Rabo is good for an online saver. They have among the best interest rates. No branch network. No everyday banking. No Australian residential mortgages at all (they are a rural / farm bank and I take it on faith that they have already accounted for things like drought even though they are Dutch and I don’t expect the Dutch have a word for drought, just wet, wetter and oh sh!t get a boat because the top paddock has rejoined the North Sea).

      • All G-20 countries have Bail in legislation in place.
        They were required to have this finalised by the end of last year.

      • While few people have large (naked) cash balances there are plenty that have mortgage off-set accounts. This is where the danger lies. Your offset savings account is legally distinct from the mortgage account and therefore vulnerable to bail-ins. I have discussed this at length with the regulator who confirmed this.

      • Unlikely, because operationally those accounts would have to be linked with their PB’s somehow, which means you get the same protection as a credit counter party or something hopefully. Additionally, doing a bail-in on them would likely be resisted by their legal teams, so can hope money is safe (less unsafe?) there.

        Edit: Then again, if RBA/APRA pushes, don’t see what they could do.

    • The government that allows a bail in for depositors who are likely saving just to buy a home will be in a desperate position, and would be the end. Given that the capital to be covered is from loans to debtors that APRA has failed to regulate. It may happen, but it’s be a massive issue for society and government.

  2. St JacquesMEMBER

    Aussie down and looking sick, house prices turning south, Aussie economy turning into mush as the rentseekers suck it dry, mining boom finished, damn, I should have invested in the USA..Should I pack more Indians into my properties or sell or maybe just abandon it? Let me do the numbers. hmmmm lucky I used a fake ID for the bank loans and titles.

  3. https://www.nakedcapitalism.com/2018/09/post-crisis-measures-failed-tame-derivatives-risks.html

    People chasing yield = based off leverage which has it origins in counter party contracts – which enable unrealistic risk attributes + make manifold any asset deflation for a short term high….. aka taming risk through contractual expectations ***creates*** and ***stores*** massive amounts of uncertainty e.g. fail rates reaching tipping points invert risk and make manifold to the power of….

    Have a nice day…. Minutemen – This Ain’t No Picnic

    https://www.youtube.com/watch?v=UDr25zjd4yM

    Don’t worry some ridged ideology will save us….

  4. As I have said since day 1 in this housing boom – someone should correlate the above chart with house price growth and decline. There is a strong correlation. It has had far more of an effect than credit availability for domestic purchasers.

  5. Why rich people don’t want to buy into an extremely overpriced falling market?

    None becomes rich by wasting money on expensive stuff that quickly loses its value

    • Rich people don’t want to rub shoulders (and any other extremities whilst they’re at it) with an increasingly povo population from the sub-continent.

      There’s only so much a gated community can do to protect before you really start looking somewhere else because it’s easy…

  6. The Oz has a piece quoting Triguboff that ” governments will intervene if Australia’s housing prices fall too steeply” It describes this intervention as a reversal of the recently introduced “taxes, charges and housing policies including foreign buyer taxes, limits on foreigners buying new apartments, vacancy taxes and local government’s high infrastructure levies on developers.”

    If the comments in the thread above are accurate, there is already evasion of the key measures so the effect of the removal will be muted.

    He also states ” the consequences of the royal commission will be greater than anyone expects – that is my big worry”.

    They’re worried. And it is good.

    • I got the feeling after this RC there will be massive policy reversal and they will try to reinflate the bubble which will work a little but not the amount they will be after.

      • If banks purely lent local money, or money from Oz govt bonds, then that may be an option. But some 40% of total outstanding loans are funded from international debt markets; and the RC is showing these lenders and international institutions exactly what has been going on here in Oz. And that genie can’t be put back in the box.

      • We’ve already had policy reversal (removal of the investor cap), foreign purchasers are already evading the current laws (to some extent) so reversal won’t help there, rate cuts are on the horizon but little of that will flow to borrowers. Immigration is already turboed and public backlash is rapidly buildig so more likely to fall than increase. And as Monty states global finance is more likely to re-weight risk against more of the same. Wages shot, Dollar falling, only Super is left.

        I agree anything and everything will be done to keep this inflated but most of the big artillery has already been deployed.

      • Burns…

        I noted many years ago at the start of the RE ramp up that most of the monies to gear up RE building mobs and provide loans came out of Singapore et al. The natives heading up these enterprises are just front house figure heads.

    • The real reason is for the rich/corrupt (and the 2 often go hand in hand in China) to offshore their money. They’re willing to accept a moderate sized haircut in order to do so, I suspect.

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