Chinese buyer interest in Australian property set to fall: Investorist report

Chinese buyer interest in Australian property is tipped to fall even further this year as offshore purchasers struggle to get loans and worry about a slump in house prices.

But if a push to ease up on tight lending standards spreads to welcoming back international buyers, interest in the local market could return.

Almost 46 per cent of agents who sell international property from China are selling in Australia now, a survey from property portal Investorist shows.

But only 26.4 per cent expect to sell Australian property next year.

The figure had already dropped from 82 per cent the previous year, Investorist chief executive Jon Ellis told Domain.

“The market for Chinese buyers is probably a third of what it used to be, maybe even less than a third, but it’s still definitely there,” he said.

Buyers interested in the Australian lifestyle or a good education for their children were still keen on purchasing property, he said.

But investors looking for capital preservation or capital growth were deterred by falling prices and state and federal taxes on international buyers.

Local banks have also clamped down on lending to non-residents, an issue for international buyers.

Some 76 per cent of agents surveyed said more than half their buyers needed a loan.

Of those who needed finance, 40.3 per cent said they had enough money but couldn’t move it out of the country because of currency restrictions, while 42.1 per cent had enough funds to buy but wanted to stretch their money further by borrowing.

“There’s lots of non-bank financial institutions that are now in the market offering loans to non-residents,” Mr Ellis said.

“They’re doing a booming trade.”

He hopes that local banks will look at loosening up loans to international buyers, amid broader signs that the strict credit standards of recent years could be easing.

This week the bank regulator proposed removing a key rule that banks must ensure borrowers could repay their loan even if interest rates rose to at least 7 per cent.

Last year the regulator also removed its cap on growth in interest-only loans, saying it had served its purpose.

“Clearly the sounds that are coming out of the Australian banking industry [are] that they are loosening up and they are ready for change,” he said.

“I don’t have any insight [about whether international borrowers will be looked at] but I certainly hope that that will be the case.”

In the coming year, inbound investment was likely to remain flat, he said, but if banks started to lend then there could be a return to growth in international buying.

Melbourne continued to be the most popular city in Australia for Chinese buyers, given its reputation as one of the world’s most liveable cities, the report found.

But demand in Sydney was falling “at quite a fast pace” given the city’s high prices, while the affordability of the Brisbane market continues to be attractive, the report said.

Perth has seen a renewed interest as commentators predict a return to growth, while projects in Canberra and Adelaide have drawn interest in China after strong marketing.