Chinese demand for australian property to stay strong
Sydney Harbour Photo: Wikimedia Commons
Chinese demand for Australian real estate is forecast to stay strong this year, despite cooling price growth and a crackdown on foreign investment.
A report by the National Australia Bank showed that in the three months to October 2015, 1 in 5 of all new apartment sales (and 14.9 per cent of all new house sales) went to overseas buyers. Chinese buyers have become major drivers of investment activity, as the country's economic outlook has encouraged investors to look for stability overseas and the weak Australian dollar has boosted spending power of foreign buyers.
Concerns, though, have arisen about illegal foreign investment in the country's real estate, as Australia house prices have raced higher in recent years, thanks to low supply.
As a result, new measures were introduced late last year to regulate overseas investment more closely, with foreigners purchasing property illegally facing Fines of around US$100,000 and up to three years in jail, and companies subject to even more sever Fines. Estate agents who knowingly assist an investor breach the rules will also be fined up to US$33,254.
Other restrictions remain the same for foreign investors, with existing homes not allowed to be purchased (only new builds) and all investment subject to approval from the country's Foreign Investment Review Board.
The market, meanwhile, is forecast to cool, with house price growth slowing from the 12.8 per cent annual price rise recorded in Sydney by CoreLogic RP Data in December.
Tim Lawless, head of CoreLogic’s research team, said auction clearance rates had "found a new floor", with auction sales in the capital city at just 50 per cent.
"With conditions softening during the normally active spring season and over the first month of summer, the outlook for the housing market in 2016 is looking less positive than the strong growth conditions seen through the first three quarters of 2015," he commented.
However, Monika Tu, an agent who specialises in the sale of luxury homes, says that Chinese appetite remains strong.
“First it was for education but now the clean environment has become top priority,” Ms Tu, who runs the agency Black Diamondz, told The Australian.
Tu has sold more than $200 million worth of property in the past nine months.