The Impact of Chinese Property Investors on The Australian Market
Funding Options Managing Director Dom Cassisi writes about the change in China’s attitude towards foreign property investment, and what it means for you.
There are those who resent the influence of Chinese foreign investment, blaming it for causing property inflation. But as revealed recently, China’s government is introducing a new policy restricting foreign investment.
How much this will impact Australia’s housing market remains to be seen.
But this is what we know so far.
The new policy is enforced with tax penalties and fees for Chinese nationals who aren’t compliant. Areas affected by the recently imposed restrictions include hotels, entertainment and real estate.
This crackdown limits outbound investing in an effort to protect China’s banks and, by extension, its national interest.
Chinese investments abroad are largely backed by banks which rely on the returns for corporate funding. But the overseas investing is starting to pose too much of a risk. If major Chinese companies can’t repay their loans, the health of China’s entire banking system will suffer.
What does this mean for would-be property buyers like you?
Recent events will likely make it harder to break into the market.
According to this data, 38% of property purchased for development in 2016 was done so by the Chinese. That’s a significant chunk of the market.
If supply kept up at that rate through this year and the following, we would reasonably expect prices to creep back down. But when the supply is suddenly chopped we can only expect to see prices get steep, again.
In the meantime, the Chinese aren’t abandoning Australia, entirely. While directing property investment goals elsewhere, it’s likely that we’ll see more funds diverted into things like agriculture and energy. Basically, anywhere else the Chinese government is okay with.
So, it may make things just that little bit tougher for first home buyers. And property buyers and investors in Sydney or Melbourne, unfortunately it doesn’t look like property in your cities will be less expensive any time soon.
Traditionally, the South Australian property market has a way of avoiding volatility, along with the peaks and troughs often experienced by other states. Adelaide still offers great investment value for those who are in the market.
If you’re planning to make a purchase, it’s crucial to get smart with finance. Funding Options leaves no stone unturned, picking through the hundreds of products on offer from many lenders to find you the best possible deal.
Contact us now for a no obligations discussion about your needs.
Dom Cassisi, Managing Director