Loss of Chinese buyers another nail in Aussie property’s coffin

The SCMP believes that the loss of Chinese buyers, collapsing immigration and surging supply is “a toxic mix for property in Sydney and Melbourne”:

A mix of Covid-19, falling immigration and a mismatch in supply and demand are proving a toxic mix for property in Sydney and Melbourne. To top it all off, interest from Chinese buyers has slumped as the relationship between the two countries sours…

In these cities, a mix of stresses that include falling immigration, disparities in supply and demand and a decline in foreign investment due in part to tensions between Beijing and Canberra, are fuelling fears that the worst is yet to come…

The loss of Chinese investment in these markets will hit particularly hard. According to Chinese real estate portal Juwai, Chinese interest in the Australian housing market slumped by more than 65 per cent in May, amid coronavirus restrictions and the deterioration of the relationship between the two countries…

Australian banks have begun warning borrowers that those who are unable to meet their mortgage repayments should consider selling their properties in the coming months to avoid accruing interest…

Nothing we don’t already know. The Australian property market is facing storms on multiple fronts, including:

  • High unemployment and falling household incomes;
  • Collapsing immigration, rising dwelling supply, and falling rents; and
  • Tightening mortgage availability as lenders become increasing cautious about borrowers’ ability to repay.

Sydney and Melbourne are obviously most exposed, given they were most overvalued in the first place and are the key migrant gateways into Australia.

Leith van Onselen
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Comments

  1. Chinese don’t want to come to a country with the virus… Victoria has demonstrated that we have not eliminated it, unlike NZ.
    As bad as the Victorian situation is, at least it has put the Chinese off.

    • Graeme Turner was off his chops this morning on RN claiming hard lockdowns don’t work
      Fran Kelly didn’t try all that hard to counter – didn’t even mention NZ.

      • Mining BoganMEMBER

        I suppose that’s a bit better than Innes Willox claiming NZ non-covidity to be a failure.

      • The90kwbeastMEMBER

        Despite that, I tend to agree with his comments that eventually we’ll need to work out a way to live with the virus. I think if there is solid progress on at minimum treatment in another 12 months, governments will one by one start giving up on lockdowns H2 FY21 as the financial cost is just too great.

        For the time being, I agree though that hard lockdowns are necessary to buy time and mitigate the health impact.

        • BubbleyMEMBER

          Oxford might have got it sorted.

          They’ve got a vaccine and already tested it on 1,000 people. Virtually no reactions and its producing antibodies.

          Its looking really good. I’m really impressed with the English today.

          • TailorTrashMEMBER

            Pommie pommie pommie …ohi ohi ohi

            ……they don’t do do it quite so vulgar around Balliol or Brasenose …….but do it they do …in a much more refined and superior way ………..as one would …wouldn’t one ?

    • As long as we can stop the outbreak at the Murray the Virus 2.0 is all positive for the rest of Australia.
      -Chinese property interest down
      -International students kept offshore
      -Borders stay closed longer

      Maybe South Australia could take one for the team and let ‘er rip next?

  2. Don’t worry hongkongers will be arriving in huge numbers soon enough with suitcases of cash. I hope covid keeps our international borders closed for a long time to come

    • What if most Hong Kongers with cash have already left. I imagine only the stupid ones who could not see the writing on the wall are still there. Rich people are not usually that stupid.

      • When the decline started it was also about China wanting to keep money in China, part of their interest in Hong Kong was control of the HK banks / financial system. If people want to leave Hong Kong, you can be sure china will do everything to at least keep their money.

        • BubbleyMEMBER

          Diamonds dont take up a lot of space and dont show up on metal detectors, unlike gold bullion.

          There is always Bit Coin and shares for the brave.

          • Saw a closed discussion with a wealthy Chinese lady, she was talking about $100m in Bitcoin. Travelling to another country, then realising it, talking about wealth portability. I don’t buy it personally. But the Chinese do. And yes, the smart ones are leaving…

            But realistically, housing prices are about demand. And demand will be falling everywhere soon enough (global Detroit?). Some of the IHME’s projections are electric – and true. With the exception of Israel, no Western Nation has a birth rate at replacement (estimated at around 2.1). But even more worryingly, half of developing nations do not have replacement rates either! This is the real story… South Korea, a country of 52m people, and one of the best economic success stories of the past 50 years, is expected to have fewer than 27m in 2100. Spain is likely to lose more than half of its 2017 population by 2100 the number of Bulgarians may fall from just over 7m to 2.6m. In total, 55 countries will experience a population decline of at least 25%. In 23 of those, the fall will be greater than 50%. Some rich countries, such as Australia and New Zealand, will continue to have growing populations, owing largely to immigration. The populations of India and China, currently the world’s two biggest, will fall from 1.4bn and 1.6bn now to 1.1bn and 730m respectively.

    • Yep, toxic mix for some, divine elixir for others. Drive a stake in the ponzi heart, twist and twist again.

  3. Mainland Chinese, no, but Hong Kongers are queuing up to get in here, according to the AFR today.

    • BoomToBustMEMBER

      Surely most HK’ers with that much coin would have already had an exit strategy in place for a few years they have been executing to move their assets out, and ramped it up when the riots started, then cleaned everything out when WuFlu stuck its head up.

      Will China allow that many people and that much capital out if i’m wrong? I doubt it.

      • Reus's largeMEMBER

        HK’ers were the drive for the last boom we just had, those that did not get their money out already are not going to get it out now.

  4. When you say the SCMP (South China Morning Post) I assumed that was the view from HK, but no the journo is a freelancer from Melbourne. Probably some renter cheering on the fall. Reus wouldn’t invite this ginger to the relations parties.

    “Joshua Mcdonald is a freelance multimedia journalist based in Melbourne, Australia. He focuses primarily on international security, politics and health in the Asia-Pacific region. He has previously worked as a correspondent in Central America and The Middle East.”

  5. I don’t see it in my electorate. Still going gang busters!
    China-built for China-buyers. Quality!