Chinese retreat from Australian property as capital controls bite

yeah i think the smart money has already left China, what ever's left is busy bidding up prices in their capital cities in a last Hurrah before the inevitable collapse.

China is stepping closer to repeating what happened to Japan 20 years ago.

 

We're driving down to Glen Waverley tonight for the Easter long weekend... Wonder what has changed with The Glen.

 

I asked a mortgage broker who mainly service Chinese clients and asked him about the risk of Chinese China overseas buyer unable to settle due to

1. Australian banks tightening loans to foreign income-earners and
2. China’s US$50,000 ($65,000) cap on the amount of cash citizens can send out of China per year.

He said that because of the above, the Chinese investors are recently caught by surprise with limited time and sudden change in Aust bank policy and Chinese Gov.

Yes, Now there are China buyers who can't settle because they are not given enough warning so some rescind contract and loss the 10% deposit. But these properties are taken over or bought by either local buyers or other Asian buyers from Hong Kong, Singapore.

A good test of how many will be impacted will be towards the end of the year or early next year as there will be many completed projects. But he estimated maybe only about 10% can not settle. which is a small amount.

He also said that as long as they are given early warning, these China buyers can find so many alternative ways to settle including:

1. Transfer money from Hongkong or Singapore instead of China as most of the rich chinese already have bank accounts in other asian countries/location. There many loop holes that can allow them to transfer money overseas but they need time. I know some are dodgy practices including buying/ importing a machine that only cost $500K for $1M in the invoice. The remaining $500K go to their private bank account overseas in Hong Kong or Singapore. Also they can use other people's name including maybe their employee to transfer money overseas.​

2. Borrow from Fund Management with Higher Interest of 7% to 8%

3. Borrow emergency fund from relatives/ family living in Australia.

 

Number 1 should be the preferred method. These past couple months china's imports from HK has had a sudden spike despite imports from other countries showing a downtrend.

High-rise Harry warns of China crisis

@Tekoz seems like your mortgage broker is as not as concerned as harry.

 

@Kangabanga I forgot to mention that I do not have mortgage broker, I was dealing directly with CBA when purchasing the great Park Ridge property.

Now I'm currently engaging with a guy named Sethy Hoc as my mortgage broker. He has helped most of my friends settle down in Jordan Springs and Edmondson Park nicely with very low LMI possible last year.

 

a mortgage broker cum marriage bureau? You are in good hands

 

I'm guessing there would be enterprising agents now taking busloads of other buyers to snap up the cheap offloaded properties. Making money selling the same property twice

 

Some of my friends in Asia over the last 2 months invested more than 10m in Australian property. Money will always find a way out regardless of laws and regulations because the world will never be corrupt free.

 

I do not know how serious this "settlement risk" is. To start with, how many overseas buyers are eligible for Oz loans, and how many actually got it. Personally I think this affects punters more, including locals.

 

[“There are a lot of Chinese now that are not settling. When you say the numbers are low, it’s because you take it over a long period, which is irrelevant,” he said.

“You must take today’s figures, so the numbers are very significant. Now the people are running around trying to find alternate finance.”]

Woulda thought its significant enough for Harry to be a little concerned to say that.

But in a NAB article : http://www.theaustralian.com.au/bus...s/news-story/a11449d7bc2e36871b01e20d3df7a5f8
[NAB has a home loan book of about $273 billion as of March. The spokesman declined to comment on the percentage of foreign buyers in its loan book.

“NAB has limited appetite for this segment (foreign applicants), which comprises only a small percentage of NAB’s lending book,” the spokesman said.]

Is small percentage meaning 10% (27.3billion) or is small percentage 1% (2.73billion)? If its 1% means approx. 2000+ apartments not settling just from NAB. What about the other big 3?

In any case, banks like westpac give 180 days preapproval, and since this reduction in lending to foreigners happened towards the end of April, the real "effect" will probaby only be seen starting october?

 

Kanga loan books comprise settled loans only.

 

China house sales surge as buyers rush to beat curbs

That's a lot of apartments snapped up in a short period.

Is what is happening now comparable to the Japanese bubble?
http://awealthofcommonsense.com/2016/09/the-greatest-bubble-of-all-time/