Despite the weakening purchasing power of Chinese buyers, prices in places such as Sydney may still be unable to cool. (photo by Aussie)
Chinese buyers` purchasing power in the Australian property market will be weakened as China`s goverment limits capital outflows further, the Australian newspaper reported. However, some commentators believe that the new federal goverment pension deal has forced a large number of Australians to opt for tax deductions as a retirement reserve tool, and prices in places such as Sydney may not be able to cool down.
Chinese and Asian buyers have long dominated the Sydney apartment market, accounting for as much as 80% of the market. If the purchasing power of Chinese buyers weakens, perhaps Melbourne is the first to bear the brunt: a large number of property contracts are in default, causing the banks to be hit. However, as federal goverment tightens pension policies, a massive shift in Sydney and other capital cities to negative tax deductions will offset the impact of Chinese buyers.
Trigopov (Harry Triguboff), founder and current general manager of Meritone (Meriton), Sydney`s largest apartment holder and developer, points out that as Chinese authorities limit individual cash outflows to $50, 000 a year, "[Chinese buyers] it is harder to move cash abroad," forcing them to retreat from overseas markets. "Chinese buyers now have to get financial assistance from developers or banks," he said.
Nevertheless, Mr. Trigopov said, "prices, which had fallen 5 percent at one time, rebounded to earlier levels" because of "reduced construction volumes and increased construction costs as a result of goverment regulations."
Australian newspaper financial columnist Glason (Robert Gottliebsen) believes Sydney apartment prices will not fall sharply unless the ruling party substantially adjusts or even suspends withholding taxes, coupled with the absence of Chinese buyers. Young professionals are underpaid and construction costs may be good for owners, he said, but first-time buyers are bound to face double difficulties.
