Full steam ahead for Chinese despite market restrictions

by Miklos Bolza28 Mar 2017
Despite Chinese government restrictions on cash outflow and tighter criteria by Australian banks on foreign investment lending, momentum among Chinese buyers does not seem to be slowing down when it comes to demand for Australian property.

“Our view is that it’s full steam ahead,” Gavin Norris, head of Australia at Chinese international property portal Juwai.com, told Australian Broker. “We’re not seeing any slowdown in material transfers in terms of the volume of enquiries coming through Juwai and our platform.”

While changes in capital controls, regulations, debt finance, availability, etc., have slowed transaction time down, the overall drivers behind Chinese interest in Australian property have far outweighed these “minor blips,” Norris said.

“They’re all long-term sustainable motivations as to why these guys are buying real estate.”

The primary driver behind Chinese interest is education, he said. Melbourne is by far the most popular for buyers through Juwai.com who see the city as having a stronger educational offering.

“For every three enquiries that we get for Melbourne, we get two for Sydney. The ratio is roughly the same again from Sydney to Brisbane.”

The second strongest driver for Chinese buyers is safety, followed by migration and tourism.

Tthe market has responded to these changes with more and more private lenders coming out to fill any gaps that the big banks have left behind, Norris said.

“Of course, the majority of Chinese were cash buyers originally. They’ve increasingly become financially savvy. They’ve used onshore debt where it was available. That’s started to erode again and I think we’re seeing the emergence back to cash buyers. There’s always ways and means for the Chinese to get around the issues that are happening.”

The main effect felt by these changes has been a certain nervousness around developers exposed to these issues, Norris said.

“I think you had offshore foreign buyers – the majority of Chinese – relying on finance that in some instances was no longer there. So they’ve had to take other means finding either a finance replacement or cash.”

Luckily, since Chinese have been traditionally cash buyers anyway, there was no need for a massive structural change within the market, he said.

Norris will appear on a panel discussion around whether the Chinese are abandoning the Australian property market at Cross Border Management’s Australia-China Property Finance Conference in Sydney this Thursday (30 March).

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