Chinese buyers of Australian residential properties are looking to other markets as tax and regulatory changes in Australia and the Chinese government’s tight capital controls continue to hit them.
Financial services group UBS said these factors had sent Chinese buyers to friendlier markets overseas, including Bangkok, which is expected to become the next property hotspot.
UBS found that Chinese buyers of overseas property tend to be highly price and currency-aware.
“Their focus on specific markets will fade or pick up, depending on their view of currency. Over the last two years we have seen Asian buying of Australian property, specifically Sydney, Melbourne and Brisbane, that’s been very strong. It looks like that has started to fade over the past six months,” said UBS head of global property research Kim Wright in an interview with
The Australian.
“I think it’s a combination of factors. Prices have been very strong in Australia so there is now a discussion that the cycle has started to peak and there’s the tax changes that have come through along with the tax controls.”
These tax controls include the federal budget’s removal of capital gains tax exemptions for overseas buyers last year and the NSW government’s doubling of stamp duty for foreign buyers from 4% to 8%. The NSW government also raised the annual land tax surcharge from 0.75% to 2% last year, while the Victorian government’s vacant residential land tax took effect earlier this month.
The latest
ANZ and Property Council quarterly research seems to support UBS’s observation. In NSW alone, the research found that foreign buyers will account for 18.1% of residential sales in the first quarter of 2018, down from 23.6% in the same period of 2017.
Last year, foreign investors bought 25% of new housing supply in NSW between January and June, according to Credit Suisse research. Of this, Chinese buyers alone accounted for as much as 87%.
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