Property parasite claims Chinese property deluge imminent

God save me from Juwai, via AFR:

Property portal Juwai’s new survey of Chinese consumers found that 27 per cent of mainland Chinese tourists planned to look at properties over the next year as part of their travels, and that Australia was their No.1 destination to go shopping.

Brisbane came in third and the Gold Coast fourth, after Melbourne and Sydney. Jim Rice

In Juwai’s list of top Australian destinations by inquiry, Brisbane came in third and the Gold Coast fourth, after Melbourne and Sydney.

Bull. There may be some rebound from persecuted Hongkies but that’s all. The Chinese capital account is tightening not loosening, recently via Nikkei:

As China allows the yuan to depreciate to a level not seen in 11 years, financial authorities have rolled out measures to stem capital outflows from the mainland.

The new rules include stricter oversight of banks in times of capital flight and restrictions on real estate developers’ access to foreign currency bonds. If the financial system is judged to be on the brink on instability, the State Administration of Foreign Exchange, or SAFE, will declare the situation “abnormal.”

Under that assessment level, banks will be evaluated on the amount of yuan wired offshore and the volume of foreign currency sold. If the levels stray too far from the national average, the bank’s grade will diminish. Such lenders will then face limits on banking activities.

China is tolerating the softer yuan to ease the impact on domestic exporters during the prolonged U.S. trade war. But the government looks to avoid a repeat of 2015, when currency traders dumped the yuan after authorities lowered the reference rate.

…SAFE has also ordered lenders to request extra documentation before signing off on offshore remittances. If a parent wishes to pay school expenses for a student studying abroad, an acceptance letter must be presented. To transfer money for other reasons, documents such as a work permit must be furnished.

…”Wiring money overseas is not allowed for the purposes of purchasing real estate or insurance products,” said a representative at a second-tier Chinese bank.

Chinese tourism numbers are peaking:

We also know that capital controls since 2016 have demolished the inflow of money laundering capital into realty:

As China slows and is forced to cut the cash rate the pressure on CNY will mount and further tightening of the capital account is inevitable.

Far from a new deluge of property buyers, you can expect Chinese tourist themselves to stop coming in due course.

David Llewellyn-Smith

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.

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