Chinese buyers have been out of control buying Australian property since 2010. Developers are knocking down established homes and constantly building HIGHRISE APARTMENTS TO SELL DIRECTLY TO THE CHINESE MARKET, THESE DEVELOPMENTS ARE FIRB PRE APPROVED. Chinese investors are still the most active off-shore players across the real estate market, outlaying $1 in every $4 spent by foreign interests in residential and commercial property.
China's property investments while down around 50 per cent over the year, still topped $15 billion in 2016-17, followed by Canada with $7.2 billion and the US with $6.8 billion.
"These half years [second half of 2016 and first half of 2017] were like night and day in terms of Chinese investment," said Carrie Law, director of Chinese real estate website Juwai.
"In the second half of 2016, Chinese investors were investing in Australian real estate at an almost irrational pace … it was like money falling from heaven for vendors and developers," she said.
"In early 2017, capital controls, financing restrictions, and foreign buyer taxes reduced Chinese investment to more reasonable levels."
Ms Law said Chinese investment in property now appeared to be running at more sustainable levels.
"Chinese buying enquiries for Australian property in March were 5.7 per cent higher than the month before and in April they were 22.3 per cent higher."http://www.abc.net.au/news/2018-05-29/chinese-property-investment-drops-as-tougher-regulations-bite/9811942 . SYDNEY HOME PRICES STARTED TO FALL IN LINE WITH CAPITAL CONTROLS AND FINANCE RESTRICTIONS FROM FOREIGN BUYERS.
I've supported analysts in 3 banks and their work isn't worth much. They keep half an eye out on their careers when making any predictions and tread a line between what numbers suggest and what the institution wants to hear. You're much better off using your eyes on the street, frankly.
Martin. FYI - Tassie is still going crazy. Place we are in just sold. Last sold for mid-400's, 4 years ago, recently went for just under 600K. Sold in the first weekend. No building inspection. There is a ton of work to be done to the place... electrical, plumbing, roof, gutters, new kitchen and bathrooms needed... I really feel sorry for the people who bought it. Any thoughts on how long before Tassie joins the party? (PS. and thank you for all of your hard work!)
Thanks - yes watching TAS - incomes are lower there, so the spate of rises seem driven by interstate investors. In fact I know of Sydneysiders selling and buying in Hobart and Adelaide. Suspect these markets will ease as investors lose interest though. Hard for locals to buy... not good.
I wonder when the government will start to panic. The pump from the FHB stimulus has abated, so they will need to do something else soon. Tax deduction for owner occupier interest? Delayed interest payments using a government insurance scheme where the banks get paid now but the government gets paid later? True innovation in Australia happens in the housing credit industry.
People will just lose their collateral on a margin loan .. All those investors who put in their family home as equity will see their retirement gone when the market corrects by 40% the amount it is currently overvalued at and they need to sell their investment properties at a loss and need to still service their debts to the banks. Major swindle using finance and credit creation in exchange for the counterpartys real assets ... Nice form of high finance predatory behavior .. A swap of monopoly money for your little green house. I wish i played monopoly and i was the banker and i could create money and issue loans like this then also be guaranteed by the government for my losses.
A friend saw something earlier this week that was of interest to me, fuel prices in SE Qld jumped by 10-15c a ltr, one servo was selling fuel for 4c a ltr less then surrounding servo's. On Tuedsay night it had a line of vehicles out it's driveway and up a side road to about 6 or 7.....there is no spare cash around and if IR rise or if employment is reduced....boom.
The RBA will have to start thinking about dropping thier rate, the credit crunch will reduce property prices and demand and spending will go negitive, in turn no or negitive growth ie recession. By dropping the rates all those with mortgages and there are heaps, should get some relief and have extra cash to keep things moving along. But unemployment is going to rise and this will break the economy's back.
If the RBA were to reduce rates, little if any will be passed on to the customer. The banks will be busy keeping their heads above water and will be looking at widening their margins as the Aussie dollar drops, so it's possible the banks may even start rising their lending rates as things start collapsing.
Adelaide would be the ledge on the side of the cliff but it doesn't have much going for it anymore so it wont be a long term footing for the masses that will desperately migrate their investments to this market.
Always thought 'Core logic' were cheerleaders for the property marketing industry. Your report demonstrates how they were supposed to behave in the 'public' interest. A week is not only a long time in politics.
Great work Martin. As you discussed, developers are applying discounts, even for house+land packages. A year ago developers were turning away external sales agents, now they want all the marketing help they can get. Rumour is buyers will have a very difficult time getting large loan approvals after July 1st.
Walk The World Lenders will loan a maximum of $335k - $365k to us even though we own land outright worth $480k, no debt at all, $50k of savings in the bank, combined income income of $100k, gold and silver valued at $77,000. We are better off than most as it would be our 2nd home being buit and our credit rating is un-marked. So what about those who have little savings or assets and are looking to buy? What can you buy in Sydney for $335k - $365k?
What about Regional Australia?? Whats the data showing- Towns under 100k population??
What about the share market- How can it be at near record highs also? Bubbles everywhere? Look at Deutsch Bank- 10k lay offs announced.
I remember looking through Perth real estate in 1998-2001 (not really that long ago, when you're not in your 20's anymore). The thought of purchasing a $240,000 property with $200,000 debt made me sweat; and a $320,000 property positively weak at the knees. Beats the hell out of me how home buyers nagivate debts multiples above this. It seems very unnatural to carry such debt. Have people just got used to it/grown up with it (its been going on for so long)? Used to be if you had a couple of hundred dollars in your pocket it was a big deal. Maybe I'm showing my age.At least I'm old enough to have a perspective on the inflation that has just occured.
Was out looking at property in Sydney today. Cherrybrook and Epping (10 in total, busy day with two kids in the car!) and there was an obvious reduction in confidence from real estate agents. While 3 months ago they were very cocky, the tone has definitely changed. They are even often disclosing price ranges well below vendors asks (less auctions now) where they would present offers. (Agents stock book definitely growing now too!) Because I cannot see a catalyst for sudden property price appreciation, I expect this trend to continue. 1.3m used to get you quality Baulkham Hills, now it will get you Cherrybrook and in a few months I hope maybe Castle Hill or even Epping. (Apologies for the Sydney centric comment!)
Playing out before our eyes in real time communication with copious data available.
Leads me to reflect upon the last property decline in the late 80's where we had mainstream media only to rely upon for financial propaganda er, information ; no www.somethingorother in those days.
Must be galling for those who set about to control the information publicly available but are now thwarted by the alternative media where the information available is limited only by ones imagination.
No surprise that few people saw the excesses of the late eighties and the 1991 recession and those who did could not effectively communicate their concerns. What a vastly different picture this time around.
Another great video contribution Martin which we thank you again.
Absolutely great, Martin! The figures you're quoting are extremely sobering and anybody ignoring your prophesies is playing with fire. A great contribution to financial literacy of our country. Thanks, mate.
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