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.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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.
mild colonial
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?
Pfh007
Yes
When Gladys is keeping the stats collected by NSW Revenue secret suspicion about the true situation is warranted.
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.
mark777
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
ZuluMEMBER
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
bjw678
Keep money in totalitarian country were government changes the rules at will, or you have obtained it questionably. Even less smart.
bolstroodMEMBER
@bjw678
see rj2k000’s Martin North link below.
It happens here as well.
McPaddyMEMBER
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.
ZuluMEMBER
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
GramusMEMBER
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.
babstar
How about the Perth mint? No need to actually purchase metal, just use the cash account.
T
Appreciate above comments – has anyone tried Rabo? They don’t do mortgage lending into the cities iirc, does anyone know?
Arrow2MEMBER
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).
UrbanWastelandMEMBER
Take a trip to Dubai and open an account with Emirates NBD.
bolstroodMEMBER
All G-20 countries have Bail in legislation in place.
They were required to have this finalised by the end of last year.
Dennis
HSBC’s internat banking is excellent from my experience, been with them 10 yrs.
They are only planning on confiscating deposits above $10,000 if things look bad (see [1]). Just don’t keep such large amounts in an Australian bank – you’ll get better interest on US T-bills anyway.
I’m hoping it’ll be more like deposits over $100k…
DominicMEMBER
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.
proofreadersMEMBER
Presumably, pollies, regulators and bankers are keeping a close eye on their backs?
AB2110
What if you were to have your money in a brokerage account like ig or saxo. Not to trade/ invest but just to store. Would it be susceptible to bail in cash?
T
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.
afund
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.
GavinMEMBER
Agreed.
bolstroodMEMBER
Thanks
Good link
Al
Golem and silver
StevenMEMBER
My precious!
Al
Gold and silver
Max
Silver, then gold
Janet
Historical ratio of silver/gold is 66. So with Ag at US$14.33 this morn = Au US$945.78, you could be right!
Frankly, I see both down in nominal terms; if it all turns to custard then assets of every kind will hit the market – PM’s included, but hey, if one has to do something, then why not….
KyleMEMBER
Really? Bullets are cheaper.
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.
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
“Foreign buyer” = an individual only or includes legal entities? If only individuals, why isn’t it at zero already?
tripsterMEMBER
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.
GramusMEMBER
The Chinese were on the margin setting prices. It only takes a small number of buyers to shift the whole market.
doctorX
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
Ino
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…
RageMEMBER
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.
GavinMEMBER
I agree it is good they are worried.
Dan121
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.
C.M.BurnsMEMBER
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.
RageMEMBER
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.
skippy
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.
Why on earth would Chinamen wanna buy our ridiculously expensive dog kennels? They can have all of their own for buckshish less change…HE HE HE HE HE HE HE https://www.youtube.com/watch?v=91KFBaYe7dc
Mr Walker
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.
Lot of their money came here and Canada.”Haircut” in not the word more like a friggin close shave with their scalps bleeding profusely, espacially if debt was involved.
HaneiMEMBER
wonder if there will be a surge in investment in Aus propt if yuan devalues and flood to get cash out
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?
This is the future of the Naphalm clad dog boxes
https://www.theguardian.com/world/ng-interactive/2018/oct/10/climate-change-what-will-happen-hellfire-california-forest-fires
Maybe this summer if this holds up
http://www.weatherzone.com.au/news/el-nino-and-positive-iod-looming/528595
But… Hey , Scummy and his idiot crew reckon Gods looking after it.
never come back
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?
Yes
When Gladys is keeping the stats collected by NSW Revenue secret suspicion about the true situation is warranted.
https://theglass-pyramid.com/2017/10/12/premier-gladys-selling-off-nsw-homes-to-foreign-buyers-by-the-plane-load/
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.
@bjw678
see rj2k000’s Martin North link below.
It happens here as well.
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.
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.
https://www.youtube.com/watch?v=i0BTdo6qGwo
This is my response and many others I am sure
Adams/North – An Urgent “Bail-In” Update – Parliament Is “Too Stupid To Be Stupid”
https://www.youtube.com/watch?v=NN2PI2lEBwY
Gets your moneys out now 😉
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.
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.
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.
How about the Perth mint? No need to actually purchase metal, just use the cash account.
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).
Take a trip to Dubai and open an account with Emirates NBD.
All G-20 countries have Bail in legislation in place.
They were required to have this finalised by the end of last year.
HSBC’s internat banking is excellent from my experience, been with them 10 yrs.
Good link. For those who don’t want to watch the whole thing, here’s the summary:
https://youtu.be/NN2PI2lEBwY?t=406
They are only planning on confiscating deposits above $10,000 if things look bad (see [1]). Just don’t keep such large amounts in an Australian bank – you’ll get better interest on US T-bills anyway.
[1] https://www.aph.gov.au/DocumentStore.ashx?id=5b260353-335d-41ad-a0eb-a452ba702e3c&subId=562229
I’m hoping it’ll be more like deposits over $100k…
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.
Presumably, pollies, regulators and bankers are keeping a close eye on their backs?
What if you were to have your money in a brokerage account like ig or saxo. Not to trade/ invest but just to store. Would it be susceptible to bail in cash?
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.
Agreed.
Thanks
Good link
Golem and silver
My precious!
Gold and silver
Silver, then gold
Historical ratio of silver/gold is 66. So with Ag at US$14.33 this morn = Au US$945.78, you could be right!
Frankly, I see both down in nominal terms; if it all turns to custard then assets of every kind will hit the market – PM’s included, but hey, if one has to do something, then why not….
Really? Bullets are cheaper.
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.
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….
Don’t worry some ridged ideology will save us….
Is that a bit like ‘ribbed for her pleasure’?
Bite the pillow – I’m going in dry…
“Foreign buyer” = an individual only or includes legal entities? If only individuals, why isn’t it at zero already?
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.
The Chinese were on the margin setting prices. It only takes a small number of buyers to shift the whole market.
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…
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 agree it is good they are worried.
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.
If Harry’s worried, I’m pleased.
Why on earth would Chinamen wanna buy our ridiculously expensive dog kennels? They can have all of their own for buckshish less change…HE HE HE HE HE HE HE
https://www.youtube.com/watch?v=91KFBaYe7dc
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.
Lot of their money came here and Canada.”Haircut” in not the word more like a friggin close shave with their scalps bleeding profusely, espacially if debt was involved.
wonder if there will be a surge in investment in Aus propt if yuan devalues and flood to get cash out