REA chief economist: Chinese property buyers are GONE!

The chief economist for the REA Group, Nerida Conisbee, has given an interview in News.com.au, whereby she claim that Chinese investors have fled the Australian property market:

“We are now looking at a very different property market to what it was like during the boom,” realestate.com.au chief economist Nerida Conisbee said.

She said investor lending is unlikely to get back to where it was any time soon.

“Buyers from Asia, a key market for new development, have dropped dramatically,” Ms Conisbee said.

“Over the past 12 months alone, property seekers from China have dropped by over 60 per cent to the lowest level we have ever recorded.

“And confidence in the new apartment sector is low following some high-profile structural issues.”

While there is little firm data on foreign investors, what does exist – the Westpac Survey – does confirm that buyer demand has collapsed:

And this evaporation of demand helped drive the decline in Sydney and Melbourne dwelling values, where Chinese investment was most concentrated:

We don’t see Chinese property demand returning anytime soon. China tightened its capital account in a bid to prop up the value of its currency:

And these capital account restrictions are only likely to intensify as China loses the trade war, forcing it to stoke domestic demand with lower interest rates, triggering further yuan pressures:

This means that more Chinese individuals and businesses will struggle to get money out of China and may, in fact, be forced to repatriate it.

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Comments

  1. Conisbee needs to get out of her office looking at stats and attend some auctions. The Chinese are still here, but now buy through local trusts and companies to avoid the 5 to 8% “foreigner tax”.
    They aren’t gonna pay a tax they can easily avoid.

    • Ronin8317MEMBER

      That is at the high end of the market. They are gone from the low end flammable, leaking and collapsing dog-boxes due to capital restriction, being replaced by Indians.

      • Don’t confuse demand and ownership. Nobody knows the extent of Chinese ownership of those flammable dog boxes, least of all FIRB. When the Body Corporate comes knocking with a “special assessment” for remediation works (be it cladding, water proofing, or structural repairs) then we will have a good idea what a ghost city looks like.

  2. Or maybe investors just leave non-performing, overpriced, poor quality assets. But this lady will never admit Aus property has become a bad investment. Maybe she should ask herself if she would put her money into an asset that’s just exposed to be of crap quality and corrected -20%. Investors might get emotional and greedy but if she is suggesting that, once they get their money out, it is business as usual, she is also saying they are stupid. I think not.

  3. Chinese Real Estate Investing in Australia was always a little weird:
    Heads I Win Tails You Lose
    Well the coins came up heads for so long that we all expected the continuous run of Heads to continue.
    Most Chinese investors (That I spoke to) didn’t, A lot simply defaulted on their Off-the-Plan purchase decisions, which was always going to happen. That’s the nature of having a buyer that’s only interested in the upside of the gamble rather than in securing a long term house for their family or a long term rental for their own benefit.
    But you know what’s even weirder: We’re the ones that want to double down! we want them back!
    @#$% me harder …again again Dipsy!
    We haven’t lost the RE brain-bug, that little parasite is alive an well living in the heads of most Australian’s…..and yet we think the Chinese are stupid, they played us like a fiddle and we’re the ones asking for more! [email protected]#$%ingbelievable

      • I’m not sure I understand: Who is/are “we”
        I understand the group “the vested interests in RE” but from my casual observation that group is mainly made up of “Us” which is clearly a different group from “We” …just trying to understand the groupings.

    • fisho, imo the vested RE interests is the REIA members, builders like HRH and boomers who don’t want to face any impediment to realising the highest price possible. The “we” is you, me, most of MB and the normal person in the street who is aware of what “damage” allowing foreign buyers has done to the price of shelter.

      • Yeah I hear you, but from my perspective “we” recently voted for a completely worthless sack based only on the hope that he could restart the RE engine. I mean did he have any actual policy? a worthless placeholder, dressed in a second rate suit, just won the office of PM (for RE) …if there’s a different WE than it it is probably a very small grouping of the powerless.

    • fisho, I didn’t realise you thought so highly of Scumo!

      It was disappointing to see people vote for self-interest, especially those who will get sfa in tax cuts. This has been the RW agenda for a bloody long time, bribe voters with tax cuts then after cut services. People are dumb. But, they really didn’t win by much.

  4. There were plenty of chinamen types evident at an auction in my area last weekend (the Heidelberg Yarra Riviera, ESR $1m). However, I didn’t stay to see who bought it

  5. It’s a relief to know that having half of China speculating on Australian property had no effect on prices, as the ABC and every over nest of traitorous vipers MSM outlet assured us over and over again.

    • BreWolfieMEMBER

      Totally agree @LSWCHP . I remember being so confused of knowing that the Chinese were a big part of the buying frenzy in RE driving the prices up a few years ago, whilst all of the MSM outlets seem to playing these facts down. They were actually stating that the Chinese only represented a relatively small proportion of the buyers in the market at that time. No wonder the average Australian had no chance of understanding what was actually going on in the real world. They were being programmed by the MSM propaganda and are still believing what they read or see on the TV as fact. It sometime feels like being in a Sci Fiction movie here in Australia, where everyone has been placed in their own little utopia bubbles within a big bubble, listening to soothing voices, all telling them that they will have good life if they listen to the advice and abide by the ruling masters of the universe.

  6. SupernovaMEMBER

    Seems like Chinese motivation to purchase Aussie property was primarily to escape the declining Renminbi, which reversed (ceased declining) mid 2017 just at the height of the Sydney property market. The Renminbi in 2019 is once again climbing (against the US $) so less Chinese will be motivated to purchase foreign property.

  7. The Chinese buyers haven’t gone away.
    They are just buying (low end established Australia housing) thru local Chinese PR proxies.

    The Chinese foreign investors buying off the plan with FIRB checks?
    Down – of course – Chinese capital controls and a flooded overvalued housing market for that type of investors.

    But the Chinese buyers and Chinese criminal syndicates buying thru a PR proxy to avoid the FIRB and to launder the billions dirty cash exiting China..
    To buy low end Australian property, units & modest houses to run as migrant only cash in hand bunk share?
    Continuing/ Increasing/exploding.

    They are often the only buyers in the market.
    Snapping up the bargains.

    Continuing their voracious acquisition of Australia low end property to run as migrant guestworker cram housing cash in hand bunk share.

    Whole streets, suburbs, regions of Sydney now Chinese PR owned and tenanted by the ubiquitous ‘foreign students’ or TR migrants.

    1.9 million PR the majority third world poor. 1.1 million in Sydney – 65% rent’ so that’s 600,000.
    Say 4-5 per dwelling. At least.
    There’s 150,000 ex Australian houses now foreign narojak PR owned & run as cash in hand subletting.

    Plus we have 2.561 million third world migrant TR in Australia with 1.3 million in Sydney.
    Poor, working & living illegally, 6-8 per squalid little unit or run down old house out west in bunk share.

    Another 216,000 properties – -almost all foreign national PR owned & cash rent.

    Then we have 440,000 Tourist/Visitors on long stay & repeat stay visas living & working illegally.
    200,000 of those in Sydney.
    Another 40,000 dwellings in just Sydney alone.
    Total = 400,000+ dwellings in just Sydney alone isn non Australia migrant only bunkshare.

    At say 6 migrants per dwelling and $160 a week for the bunk,wifi, bag of rice & toilet roll deal
    That’s an $18 million migrant guestworker rental market in just Sydney alone.
    And less than $8 billion rent declared. (Legal occupancy or market minimum rent only(

    All up – close to $80 billion of Chinese dirty money washed in & laundered via a PR in Australia.

    In just Sydney alone over 400,000 ex Australian dwellings now foreign national owned and packed full of Migrant guestworkers. Low end old walkup units & modest houses in the sprawling migrant zones.

    And it’s not about capital gain.

    ➡️ It’s all about cash return.

    The little dirty old 2 bed unit in Burwoo that the Chinese criminal syndicate laundered in $500k to buy via the Chinese PR proxy?

    8 x Chinese migrant guestworker renters at $160 each a week, $1,280 a week.
    -> $66,560 cash return yearly.
    -> 13% return & no tax paid.
    Only $20k (legal occupancy or minimal rent declared.
    $46k back to the Chinese criminal syndicates.
    And the local Chinese PR national claims negative gearing as a kicker..
    go to Burwoo – see this reality.

    That little run down old fibro shack in Granville?

    The Chinese criminal syndicate laundered in $650k to buy it via the Chinese PR proxy.
    10 migrant Nepalese or Malay or Indian renters at $160 each a week $1,600 a week.
    $83,200 cash return yearly.
    13% return & no tax paid.
    Go to Granville- see this reality.

    It’s all on display.

    Q : Where exactly do the MB readers think over 2 million third world migrant poor PR & TR and illegally working tourist visitors in Sydney live?

    And how exactly do you think they live?
    (90%+ live in ‘private shared accommodation’ ABS) Who do they pay rent to?
    And who do you think owns that property?
    Some unskilled Chinese, gifted a PR who works in the shopping centre fixing phones earning $40k a year – but somehow owns 5 investment rental properties worth $3 million … and claims negative gearing.

    Where do you think the real money came from?

    Australia – time to wake up.

    The Chinese haven’t abandoned the market at all.

    As prices fall they are increasingly buying via a Chinese citizens or a Chinese National on a PR to further exploit the migrant guestworker overload & housing needs.

    Waves of dirty money flooding in – the PR proxy to avoid the FIRB and then rivers of cash back to the Chinese criminal syndicates – all in your face – but Australia turns a blind eye to it all.

    • RubiconMEMBER

      Hi Mike, love your work, however one thing that doesnt quite gell with your thesis:
      If the share houses are absorbing the migrant inflow, 10+ to a house say, then there should be a lot of spare capacity (houses) driving down rents. At some point the ‘reason d’etre’ of shared housing breaks down, once rents come down too?

      • The migrant influx has massively exceeded housing capacity in Sydney.

        The ‘infill’ is much higher occupancy ratios.

        And it’s mostly infill at the low end – the old established units in the CBD & west and now the small modest houses out west.

        What was normally Australian occupancy density (2.5 in a house to 2.9 persons in a unit – ABS) has doubled or tripled to 6, 8, 10 migrants per dwelling)

        It’s economic and cultural.
        The Aussie normal young childless couple in a unit earning $70k gross or $52k or $1k net a week.
        $400 a week rent – 40% of net income.

        8 x Migrant guestworkers in exactly the same unit
        They have a total combined income of $344,000
        ( 8 x $43k each being treasury estimate)
        So individually poor but collectively 5 times the Aussie couple in capacity in collective rent payment.
        Rent paid cash in hand bunkshare $160 each
        X 10 = $1,600 a week – 4 times.
        But the Chinese National PR proxy owner who buys on behalf of the Chinese criminal syndicate backers only declares $400 (legal occupancy or minimum market rent) and the other $1,200 a week cash back to the Chinese criminals funding it all.
        And it’s cultural.
        Australians won’t live 6 or 4 to a room in bunk share.
        But for the temporary resident Asians, Indians, Nepalese, Malays, Africans, Middle Eastern etc – all dirt poor, working & living illegally cash economy week to week – this is how they live.

        And there is your issue.
        It’s not gracious large mansions in the north shore being filled up with migrant guestworkers.
        Or the high end units & houses.

        It’s grubby little modest established units & small houses out west along the train lines and in the migrant zones being voraciously acquired by Chinese criminal syndicates to launder their cash into a safe haven and then the rivers of cash in migrant subletting.
        That’s why we have 116,000 Australian permanent homeless and another 360,000 seeking affordable housing.
        Because that bottom end of the market has been completely wiped out by foreign dirty money buying it up via a PR proxy to run as cash in hand migrant bunkshare.

        Go to Burwoo
        Go to Strathwoo
        Go to Rhodes
        Go to Zetland
        Go to Auburn or Granville
        Or if you are in the city – go visit World Tower, the Regis, (1,900 renters in 282 units or 6.7 per unit) the Summit, the Luminere, the Quay apartments, wonder at the veritable flood of non Australia migrants in the railway station like lobby – as they wait for the unit manager to come down with the ‘shared’ pass key.

        Or the Australian homeless, living on the street – evicted from this low end housing by the foreign criminal money and the migrant influx.

        It’s all on display – in our faces – if you want to see it.

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