Further hit to Australian property as China intensifies capital controls

AFR article

https://www.google.com/search?clien...roperty+as+China+intensifies+capital+controls

China has introduced jail terms for operators of "underground banks" illegally helping tens of thousands of its citizens transfer money out of the country to buy property overseas, in a move developers warn is a big blow to Australia's real estate market.

China's Supreme Court quietly introduced stiff penalties for illegal currency exchanges at the start of the month, in a further effort to stop capital from leaving the country. China's leaders want to prop up the slowing economy, stimulate the local property market and prevent a further sell-off in the domestic stockmarket.

The move, which imposes jail terms of five years or more for offenders, would target the operators of so-called "underground banks" which facilitate illegal foreign exchange and cross-border trading. Tens of thousands of middle class Chinese use the services to funnel billions of dollars out of the country to buy property in Australia, New Zealand, Canada, the United Kingdom and other countries.

 

Not sure which paper it was in a few weeks back , but it implied that Australia was being hit harder than other countries, and it was more to do with controls from China.
Lots of anti-Chinese rhetoric coming out of government lately , so hopefully they are not shooting themselves in the foot..

 

I thought this has been happening already in recent years.

 

Not Jail time, before they control it by not legally allow you to take the money out, then people use illegal mean and other parties now they up the ante if you going down this path
jail time for you and jail is tough in China and most people would be pretty scare to go down this path.

China is in trouble, a few high profile companies default on their bonds started late last year and it start spreading into the new year with more of them defaulting

they need all the capital they can get and keep it in the country, capital out flow is bad news and worsen the debt situation.

it is no coincidence they start introducing this late last year and taking effect in Feb.
they know the real story and the real number behind the defaults

Good time are over, time to batten down the hatches

 

This got nothing to do with anti China, this is Chinese wanting to control the out flow of capital from their country. You usually do this when you know the debt storm is coming
first step is control outflow of capital, second step sell up foreign asset and bring capital back home just like the Japanese did in the 80s

 

I think it was Zenick Finance (Mortgage brokers) that wrote over a billion dollars in loans with widespread and systematic fraud. Essentially Banks injected that much cash into the market without any underlying fundamentals as to their clients' repaying capacity. Surely that had an unwarranted upward pressure on prices in boom times.

 

Yup. This is the gut shot.

 

Yeah, if China doesnt give in to american demands and do a trade deal everything is going down the gutter soon. Repeat of what happened to japan almost 30yrs ago. Chinas PMI in recent months has been pretty bad, without an expanding manufaturing sector they will go from 6.5% gdp growth into recession pretty quick

 

it s probably already not pretty, China cars sales are down 17% y to y .

And there will be more pressure down here next year to enforce some AML on property in compliance with the international standards

from bankingday/MB :

Insane

 

How interesting, we were told continually that foreign buyers were not the cause of the rapid climb in housing prices now were told lack of foreign buyers is one of the primary drivers of a crash in housing prices.

 

According to Scomo, NG has nothing to do with house prices being so expensive, but removing it will cause them to tumble [further]

 

More foreign buyers forced to sell their homes in FIRB crackdown - Google Search

While breaches increased, FIRB-approved investment in housing by foreign buyers fell by 58 per cent year on year to $12.5 billion, its lowest level since 2009/2010.

This compares to $30 billion worth of investment in residential property in 2016-2017 and a record $72.4 billion in 2015-2016.

"The likely reasons for the plunge are the ongoing hike in government taxes on foreigners; far greater scrutiny of applicants; domestic lenders tightening for foreign buyers; tighter capital controls, especially from China and a weaker outlook for house prices towards the end of the period," UBS economists George Tharenou and Carlos Cacho said in a note on Tuesday.

The collapse of foreign investment is key to their bearish outlook on the property market, with expectations house prices will fall 14 per cent from peak to trough nationally.

 

^^^ and that's just the official purchases.

 

They won’t, they can afford the long game where US president comes and goes in 4-8 years they can agree to whatever and just string along and carry on

No way they do a structure change to make their economy worse off by not stealing IP and force tech transfer.

Judging by Xi comments in the last few days the change of structure change is next to zero

 

That name of the game in finance
Confusion, misinformation and keep everyone on the wheel

 

Well Xi cant risk a crashing economy and people in rebellion.

If he is not budging and usa does 25% tariffs its pretty much game over.

Lol u are probably too young to have experienced the Japan bubble and crash in the 90s as well as the AFC late 90s. History repeats i can almost feel another gfc in the making for later this year. Fun times....

 

I for one am very pleased that much of the madness has stopped.

Its just not normal for Chinese (or for that any foreign nationals for that matter) to be coming on holiday, being bussed around some very average Australian residential suburbs and banging on people's front doors shouting "you sell to me!".

Such was the boom in 2015-16. madness really. Some people liked to pretend it was a new normal. Many have also made good money out of this of course too!

Many jurisdictions not just Australia have more recently clamped down on foreign investment in domestic residential property or have increased higher taxes at the same time as the capital controls in China have come in.

The current situation is just a return to normality, but it just goes to show the extent to which this foreign investment has influenced and distorted the normal residential market in some Australian cities, and some other cities in other major western countries. most of which are now experiencing weaker property markets as a result of these restrictions.

There'll be a new game in town soon enough once things have worked through

 

All caused by central bank QE. Banks across the globe were desperate to lend to as many people as possible due to all the funding being injected into them.

 

The Japanese in the 80's and early 90's were buying and developing trophy style properties; resorts, hotels, and high profile office buildings. It all came a cropper. The Chinese buying established resi and building resi seems conservative in comparison

 

Chinese not just doing resi stuff, just like japanese back then they are also doing rrsorts and hotels, well at least they were until they got reigned back last year.

Just an example, this mob has taken over the billion$ JEWEL project at the GC
Property | Yuhu Group