This Chinese New Year is expected to pass with a fizz rather than a bang for Australian property, with experts warning that “rivers of gold” have all but dried up.
It would continue a string of lacklustre golden weeks, where Chinese investment interest has fallen well below its peak in the 2015-16 financial year.
Chinese activity on the international investment portal Investorist has been low, which is abnormal for the lead-up to the Chinese New Year, the site’s founder Jon Ellis said.
“Typically what we see with Chinese New Year is a few weeks before there’s a big spike in activity on our platform. This year it’s been flat,” he said.
Mr Ellis put the slump down to the departure of Chinese speculative investors from the Australian market, due to tight capital controls imposed by the Chinese government and a raft of Australian taxes on offshore buyers.
“The trend we’ve noticed is there are no longer speculative Chinese buyers coming in,” he said. “There are still Chinese people buying property if they have migration plans, if they have education plans. The straight investor is gone.”
Carrie Law, the chief executive of Juwai.com, another Chinese-focused investment portal, said deteriorating US-China relations were helping the Australian market but demand was likely to hold steady rather than pick up.
“You could see investors at the airport in Shanghai getting out of the line for the flight to LA and getting in line for the flight to Sydney,” she said.
“Because of its deep market and long-term stability, Australia is a natural alternative for a certain class of property buyer, who would have been seeking those same benefits in the USA.”
The Australian dollar was down about 5 per cent on the yuan, which was helping Chinese buyers justify purchases, Ms Law said.
“If it falls another 2 or 3 per cent, that completely erases the cost of the foreign buyer stamp duty, which tops out at 7 to 8 per cent, depending on the state.”
But despite this, the outlook continued to be less than ideal.
“Some people in the industry feel that 2018 could be the year that Chinese demand stops falling and starts to recover,” said Ms Law. “Our conservative forecast is for flat demand, which is an improvement over last year’s decline.”
Interest from high net worth Chinese investors has been increasing in the commercial property sector instead of housing, and demand was steady in the very top end of the residential market, Black Diamondz Property director Monika Tu said.
“It looks like it’s a growing portion of Chinese investors [looking at commercial property],” Ms Tu said.
“These are newcomers, first-timers.”
Kay & Burton’s Jamie Mi agreed buyers were concentrating on the top end of the market, taking demand away from investment-grade properties.
“The activity in terms of volume won’t be a significant as before but now [they’re] talking about the top end of the market,” she said.
“It just seems more under the radar these days.”
This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/rivers-of-gold-dry-up-chinese-new-year-likely-to-be-flat-for-property/