Chinese investors account for a third of mortgages, franchise says

by Julia Corderoy24 Oct 2014
Amid speculation that the Australian property market is cooling, it looks like Chinese investment in the property market is still hot, hot, hot. 

According to one of the largest mortgage providers in the country, almost a third of all home loans the company wrote in September were to Chinese investors. An article by Bloomberg News reports Yellow Brick Road chairman, Mark Bouris saying the mortgage provider lent $281 million to Chinese investors out of the total $1.1 billion loans written during that month. The proportion of Chinese borrowers has doubled in the past year, he said.

Alliance Mortgage Solutions, a small Sydney-based brokerage who has only been operating since November 2012, has settled $416 million in 2014 so far. At the AMAs last Friday, the brokerage was the first organisation from the Chinese community to take out the Best New Brokerage of the Year award.

According to Eric Cui, Sales Director at Alliance Mortgage Solutions, 25% of the brokerage’s total loan settlements written this year were for Chinese investors living overseas. A further 70% of loan settlements were from within the Chinese community in Australia – which includes citizens, permanent residents or other relevant visa holders. 

Cui told Australian Broker that Australia is attractive for overseas Chinese investors because local residents in China are required to pay more than a 60% deposit upfront for the second investment property. By comparison in Australia, Chinese investors are only required to pay between a 20%-30% deposit upfront.

Couple that with an unstable property market in China due to governmental regulation and political uncertainty and the higher rental yields received on Australian property investments over Chinese property investments – and Australia is a winner, says Cui.

The influx of foreign investment in Australia is currently the subject of an inquiry – to determine whether foreign investment in real estate is causing distortions and making housing less affordable. However, Bouris said that demand from offshore buyers is good for the Australian economy, contributing to a housing boom that’s creating jobs.

“The builders are busy, plasterers are busy, bricklayers are busy, suppliers are busy, real estate agents are busy, lenders are busy,” he said. “It’s actually not a bad market."