Although the Sydney and Melbourne property markets are no longer flooded by Chinese buyers looking to cash in on the residential property boom, property agents such as CEO Mark Mendel of iBuyNew suggest that Chinese buyers are simply waiting for the next investment opportunity to hit.
Between 2012 and 2016, Chinese buyers were a keen buyer type in the Australian property market; however, with local banks cracking down on foreign lending and introducing tougher restrictions and rules, many Chinese buyers have been pushed out of the Australian property market altogether, particularly in the last year. China’s capital transfer restrictions, the increased control on foreign exchange and the surveillance by the Foreign Investment Review Board has also had a part to play in this.
This decline in Chinese buyers has been felt across the market, including the luxury market which has been hit hard and typically does not require funding.
However, Mendel states that many potential property buyers are simply preparing for the next round of Australian investments that are set to come to market.
"Active investors are still keen to buy and they are educating themselves on finance opportunities outside the market. For the rest if the banks start lending again, they will be back tomorrow, 100 per cent," he said.
"The desire to buy in Australia, to own clean air and blue skies, is very strong."
With the big four banks stopping foreign lending amid claims of false mortgage documentation and unsubstantiated income sources, buyers simply looked elsewhere for alternative funding, whilst tightened up their paperwork.
With Treasurer Scott Morrison announcing last year that foreign buyers are now able to buy off the plan dwellings when another foreign buyer has failed to reach settlement, this has seen many Chinese buyers take over their friend’s or relative’s contracts instead.
Chinese buyers and foreign investors play an important part in Australia’s economy and property market. Without them, many new residential developments simply would not proceed.
This full story is featured in the Australian Financial Review and can be found here: Where have Chinese buyers gone and are they still buying property in Australia?