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Chinese retreat from Australian property as capital controls bite

Discussion in 'Property Market Economics' started by Kangabanga, 15th Sep, 2015.

  1. Kangabanga

    Kangabanga Well-Known Member

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    http://www.afr.com/real-estate/chin...erty-as-capital-controls-bite-20150914-gjm282
    Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing's move to tighten capital controls.

    One Chinese agent said the latest efforts by the central government to avoid large capital outflows were having a "significant impact" on his business.

    "It has affected 70 to 80 per cent of current transactions and some have already been suspended," said the agent who asked not to be named.

    Read more link above..
     
    Last edited: 16th Sep, 2015
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  2. jaybean

    jaybean Well-Known Member

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    It's so dirty there the money will still find a way out.
     
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  3. 2FAST4U

    2FAST4U Well-Known Member

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    Good to see. Long term this influx of Chinese capital, particularly into non-productive assets (such as established housing) does absolutely nothing to benefit the average Australian.
     
  4. Kangabanga

    Kangabanga Well-Known Member

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    Possibly for the priviledged few but It's pretty hard to bring in undeclared large sums of cash by person and any electronic transfers will be heavily scrutinized going forward.

    well we shall see the response in Syd/Melb auctions(lack of asian bidders) and new apartment sales (sharp drop in sales) pretty soon if they don't find a way out.
     
  5. JDP1

    JDP1 Well-Known Member

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    I've heard this before...that resi property is a non productive asset...and I never understood why so...It provides a necessary need ie roof over your head , produces significant demand to service providers eg utility companies..and land tax dollars = revenue for uncle Sam.
    How can that all, and much more I'm sure, be considered unproductive??? And more directly at your point, I'd argue it absolutely does assist the average punter on the street...same reasons as above..without overseas investment, there would b less money in the system which results in less demand for services = higher costs to average punters, perhaps higher unemployment becausevof this less demand, and less competition in any market is not really a good thing for long term viability and competitiveness...I would think you would want the market to be highly regarded and sought after overseas...
     
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  6. 2FAST4U

    2FAST4U Well-Known Member

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    As to your first point all of that can be done simply by raising the immigration rate, which is what Australia has done significantly ever since the Howard era. Having a landlord in China buy an Australian residential property, and rent it to tenants does not stimulate economic growth. It actually decreases Australian growth compared to if that tenant was paying it to a landlord that resided in Australia who would either use that money paying back interest to the bank or spending it in the economy, which has a multiplier effect throughout the local economy. Every point you mentioned is accomplished by having an Australian purchaser e.g. service providers, utiltity companies, land tax (if they are over the threshold).

    As for your second point it’s unproductive because they are not producing anything new! All they are doing is taking an existing property and renting it out. This doesn’t create any supply!!! I’ve got no issues with foreign investment if it’s strictly regulated to building new houses. If new houses are built according to the Victorian Government the multiplier effect for new housing is around 1.93. That means for every $1 invested in new housing generates $1.93 to the broader community. However, when foreign investors come to snap up existing houses it’s just another person that you’ve got to bid against, which pushes the prices up for everyone and does absolutely jack to help the average Aussie.
     
  7. Tekoz

    Tekoz Well-Known Member

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    Let's hope the newly elected PM, Malcolm B. Turnbull can create new regulations to stimulates the economic condition in Australia.

    I've heard he's a savvy property investor.
     
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  8. SouthBoy

    SouthBoy Well-Known Member

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    This is bad news for some. My mum's counting on overseas investors to push up her property price in Sydney, to set her up for retirement. Should I ask mum to sell her Sydney property this spring?
     
  9. Tekoz

    Tekoz Well-Known Member

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    @SouthBoy does your mum already committed in buying the New OTP or H&L package in Australia somewhere ?
     
  10. Bayview

    Bayview Well-Known Member

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    No.

    The price will still go up over the next several years, but the wind will have gone out of the Sydney sails by about mid next year or even earlier, I think.

    Basically; a flat market for a few years, then off it goes again.
     
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  11. 2FAST4U

    2FAST4U Well-Known Member

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    Yeah there's still 80,000 people migrating to Sydney each year so there's still plenty of demand.
     
  12. Tekoz

    Tekoz Well-Known Member

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    How did you know about that number mate ?
     
  13. See Change

    See Change Timing Lord Premium Member

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    You can't rely on overseas investors pushing prices up further . It may happen , but don't count on it .

    Contrary to other posts , Sydney can go backwards and properties can sit on the market unsold for long periods of time . The last two years have been the first boom in Sydney since 2003 .

    Cliff
     
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  14. Bayview

    Bayview Well-Known Member

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    There was immigration back in the early part of this century too; yet houses were not selling then.
     
  15. 2FAST4U

    2FAST4U Well-Known Member

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    I wrote it in another post recently but it was Howard that let the immigration flood gates open as well and house prices boomed under his watch. In my city house prices more than tripled between 1999 and 2007. Perth boomed during the mid 90s up until 2010 from population growth. Brisbane boomed up until 2008. Sydney boomed from the late 90s up until 2003 whilst Melbourne boomed from the late 90s until the mid 2000s.
     
  16. 2FAST4U

    2FAST4U Well-Known Member

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  17. Tekoz

    Tekoz Well-Known Member

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  18. SouthBoy

    SouthBoy Well-Known Member

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    No, she wants to move up to the North coast of NSW to spend her golden years in the sun.
     
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  19. See Change

    See Change Timing Lord Premium Member

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    Just had a chat to my mainland Chinese , property investing co-worker .

    He said it's harder to get money out . But " can they still get it out ? "

    " Definitely "

    Cliff
     
  20. Tekoz

    Tekoz Well-Known Member

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    Ah I see, ifthat is the case then, no effects for her PPoR since legal foreign / overseas buyers can only purchase new property not existing ones like your parents now living in it.