According to a work report released on December 2 by the Australian Ministry of Finance, the demand for Australian real estate by foreigners has increased rapidly in recent years, with Chinese demand being the dominant one. In mid-2010, Chinese citizens receive 50% of Australian property investment permits, up from 70% in early 2015.
"I have decided to give up the delivery. None of Australia's local banks can lend money. While local developers have been helping me find another loan channel and have said they could extend delivery for a month, domestic agents have been calling me to ask if I want to consider mortgaging Shanghai's house, but it's too difficult. In the past, home purchases in Australia, loans can do 70%, 80%, now can not borrow money at all. "I decided to give up the down payment and not the house." on December 6th, Miss Wang introduced her situation to the 21st Century Economics reporter.
In 2014, Ms. Wang, who lives in Shanghai, signed an apartment in downtown Melbourne, Australia, for investment at a total price of 5 million yuan, with a down payment of 10 percent, with the balance to be paid on delivery day and scheduled for delivery on December 7 this year. However, the new deal in Australia's banking industry has completely disrupted her plans. Since the first half of this year, Australia's local banks have begun to tighten lending policies to foreigners.
Chinese capital accounts for 70%
One of Australia's largest banks, Western Pacific Bank (Westpac) PR, said in an interview with 21st Century Business News on December 1 that the bank had stopped lending to non-Australian residents. In addition, ANZ has stopped lending 100 percent of its income to non-Australian home purchases; if more than half of its total income comes from foreign countries, it can only make up to 70 percent of its home purchase loans. The Federal Bank of Australia has stopped lending 100 percent of income from non-Australian sources and 100 percent of self-employed income; for those with temporary visas, it can make up to 70 percent of home purchases.
On December 6, Miss Yang, head of business of Australia Qianjing Investment Consulting (Shanghai) Co., Ltd., told the 21st Century Economic report that from May to June this year, Local banks in Australia have tightened home-purchase loans to overseas earners and officially stopped in July and August.
"according to our clients, one out of 10 cases gave up delivery, mostly in September and October, and they were too late to deal with the new deal." Said Miss Yang.
According to data released by the Australian Foreign Investment Review Committee, the share of transactions reached by Chinese people among all types of foreign investment in real estate rose from 28.4 percent in 2013 / 14 to 41.3 percent in 2014 / 15.
In addition, according to a work report released by the Australian Ministry of Finance on December 2, the demand for Australian real estate by foreigners has increased rapidly in recent years, with Chinese demand as the dominant factor. In mid-2010, Chinese citizens received 50 percent of Australian property investment permits, up from 70 percent in early 2015.
But the report also noted that the rise in house prices in Australia in recent years could not be simply attributed to external demand, as most of the approved foreign investment applications were in the future rather than in the second-hand market. Most of the growth was due to local factors, including inadequate supply, low interest rates and fiscal policy.
In an interview with 21st Century Economic News, James Macdonald, head of China Market Research at Davis, first Pacific Ping, said that housing prices in Sydney and Melbourne have risen sharply in recent years, mainly because of the increase in the local population. Lower financing costs and supply shortages.
Ms. Wang, the buyer, admitted that she had not gone to see the house at first. "at that time, the house in Australia was very attractive, the down payment was lower, the loan was easy, I originally planned to rent the house, rent about one hundred and twenty thousand yuan a year, can be used to repay the monthly supply, there is also a greater room for appreciation of the house. As far as I know, a lot of people hold on to my idea and start without going to the house. " She said.
Small impact on high net worth population
Ms. Wang has suffered a double blow from the New deal. After buying a house in 2014, Ms. Wang began to work as an Australian real estate agent at home because of her personal bullish demand for Chinese property in Australia. "Business in 2014 and 2015 was good," he said. This year's tightening of loans was a fatal blow to a number of home buyers and small agents like me, as goverment raised the stamp duty on transactions in some of Australia's local states, and it could be said that the domestic Australian real estate agency business has entered a cold winter. So I started a business transformation, transferred to the United Kingdom, the United States of America. " Said Miss Wang.
The shift in identity from home buyers to intermediaries has given Ms. Wang an opportunity to reach out to more Chinese buyers.
"as far as I can see, there are three main categories of Chinese buyers in Australia, one with a study abroad or immigration program, and one with a high net worth population with global asset allocation needs. Many of my friends have bought houses in Australia, belonging to high net worth people. Generally, they already have several houses in Shanghai. They feel that they can't put all their eggs in one basket, so they begin to allocate foreign assets. For example, Hong Kong Insurance and Australian property. They do not choose very expensive houses, the general price is around three hundred thousand- four hundred thousand Australian dollars, the rate of return is not high, can maintain value and generate rental income can be. The new deal also affected the crowd, but most of them were able to pay in full and were ready to do so. There are also investors like me who are most affected by the New deal. " Said Miss Wang.
According to the 21st Century Economic report, Chinese buyers in Australia abandoned delivery of property concentrated in the market after the introduction of the policy. This has to do with the country's policy, after Australia's foreign investment rules led overseas investors to buy new homes, such as unfinished apartments such as pre-term apartments.
Rising capital costs and thresholds
December 6, "loan under the New deal, abandoned flowers can be said to be 'corpses everywhere'. There are also Chinese buyers trying to find new sources of funding, some looking for a new home. " In Australia engaged in real estate industry chain-related business, Ji Zhen told the 21 st century economic reporter.
"it is true that more and more Chinese buyers have come to their door and let us help them find their next home. That is, Chinese buyers who can't find loans sell their homes to local people (including those with green cards and local identities in Australia) and sell them at the contract price of that year, which we in the industry call 'picking up corpses.' " Ji Zhen says he runs a real estate agency called Elite Home Investment Pty Ltd..
Chinese buyers have found new ways to participate in the Australian property market after local Australian banks stopped lending to foreign incomers, Reuters reported earlier, with full payments and buyers seeking new funding channels. Such as foreign banks other than Australia's local banks, and non-bank loans such as fund companies. Chinese interest in Australian property has also revived.
According to data provided by the overseas real estate website Home-Foreign Network to the 21st Century Economic report reporter, the Australian inquiry volume of the site in the first three quarters of this year fluctuated considerably, especially in the second quarter of this year. Inquiries from Chinese buyers on the Internet for homes under $1 million in Australia rose 12.2% from the same period last year. Enquiries in the $1 million to $5 million range were 10.6 percent higher than in the same period last year, while those above $5 million were down 17.9 percent from the same period last year. In the first quarter, the figures were 69%, 73.8% and 8.3%, respectively. However, enquiries recovered in the third quarter.
However, 21st Century Business Reporter learned that these new approaches mean higher funding costs and thresholds.
"after the new deal, most Chinese buyers chose to trade in full, but usually within a year," Li Yi, manager of Australian real estate brokerage Leading International PTY LTD, told 21st Century Economics on December 6.
As for non-Australian foreign bank loans, the 21st Century Economics reporter learned from a number of people that the terms were harsh. "some foreign banks (such as Dahua, HSBC, Standard Chartered, etc.) need to be prepared more than half a year in advance, that is, to buy these banks' wealth management products and become high-end clients, so they can make loans in Australia." Said the buyer, Miss Wang.
"while HSBC and some Asian banks continue to lend to foreign income earners in Australia, I understand it is necessary to have hundreds of millions of deposits at home to obtain loans; even so, there will be basically no loans from the second half of 2016." Li Yi said.
There is also the role of a loan broker in the Australian mortgage interest chain. "after the new deal, I did get more demand from Chinese buyers, and I acted as a broker between the lenders (some small local banks and financial institutions, such as insurance companies) and the buyers. We will help customers prepare materials that are more in line with the loan and earn consulting fees from them. " In addition to real estate brokers, Ji runs a loan broker called Uselect Finance Pty Ltd in Australia.
"there are also domestic fund companies that have become new sources of lending, often with offshore accounts," Ji said. However, fund companies generally require high returns and have small amounts of money compared to banks, which, in my view, is not a big climate. "
In addition, 21st Century Economics reporter also noted that Australian local developers began to provide loan services. According to Meriton, an Australian developer, the company currently provides fixed-rate loans to local residents or overseas buyers for a period of two years, up to 70 percent of the full amount of a loanable home purchase contract.
"as far as I know, only Meriton, the local developer, does the loan business, and the interest rate on well-sold real estate loans is around 5.5 percent, slightly around 3.5 percent." Ji Zhen revealed.
Developer investment slows
Not only have Chinese buyers and intermediaries been affected by the new deal, but also have local developers. In addition to the Australian real estate and loan brokerage business, Ji Zhen also invested in the development of developers friends in Sydney. "one of the properties I invested in was the school district house in Sydney. At that time, the land was won for 13 million Australian dollars. The one that opened this year, this time there was no previous' day winding up', but it took three months (only to be sold out). I really feel the chill of the market. " Ji Zhen said.
Ji Zhen also said that based on the current market, he decided to suspend investment in real estate development. "I sold a property (including land and development rights) to a listed company in Hong Kong, earning only the added value of the land. But at the same time, I also have some land, but not in the near stage of development, wait for the time. "
In Ji Zhen's view, the current loan closure policy is bound to be short-term. "perhaps this policy will appease local people's grievances that they can't afford to buy a house in the short term, so goverment has gained more public support. But the long term is not a good thing for the Australian economy. Real estate has become one of Australia's pillar industries, a chain of local stakeholders, including developers, suppliers of building materials, and real estate sales. Immigrants, studying abroad, accountants and lawyers, etc. At present, the new deal has only affected developers at the front of the chain. Some small and medium-sized developers have opted out for the time being, and large developers have become conservative and will slowly hit the middle and back ends. "
This week's agent.
"it is too hasty to blame foreign buyers for the rise in house prices," Pan Zhuoli, an overseas real estate website, told 21st Century Economic News on December 6, in an interview with overseas real estate website CEO Pan Cheuk-li. Many people in the industry now believe that prices in Sydney and Melbourne will go down the aisle, and that if they want to keep prices stable and increase supply, they should instead encourage foreign buyers to come and buy, not shut out. "
"it is not expected that the current strong rise in Australian house prices will be sustainable, but in the long run, as Australia's population continues to grow, the housing market outlook remains robust." James Macdonald, head of China market research at first Pacific Davis, said.
