The Australian property market has fears that they are under attack, according to local experts. There is a slight unease in large areas of the residential property market field, which has triggered a fall in prices.
Deloitte Access Economics’ Chris Richardson recognised this worry through the economic stats and has warned first-home buyers that now may not be a good time to buy. The Australian property market may endure some serious changes and this is without local authoritative figures actually making it easier for first-time buyers to buy Down Under.
So what is actually going on?
Asian and Chinese foreign investors want to buy but they’re without help from local Australian banks. They’re unable to prove their income in China to Australian banks and that is why they’re not willing to help – thus jeopardising the Australian property market.
China is making it almost impossible for money directed to Australian housing to legally leave the country. As foreign investors, Chinese people who purchased property “off the plan” two or three years ago are forced to find ways of getting money out of China or pay the high-interest rates that are required by the finance systems. According to officials, there is a massive Chinese investor funding problem in Melbourne and a lesser one in Brisbane.
Chinese foreign investors have belief systems that their government will change the rules or that there will be a miraculous change in Australian banking attitudes. However, the current Chinese funding rules are not looking so great.
Alongside this, Chinese foreign investors are not participating in the ‘uphill-battle’ market because it’s illegal without FIRB Foreign Investment Review Board approval. However, there is still some buying activity going on behind closed doors, for example, with them making agreements with relatives and friends in China. The Australian property market and the government are not overseeing these activities though, and are seriously clamping down on behind-closed-doors arrangements.
Local investors include high-income medical professionals but also teachers, police and trades people like plumbers. Investor demands have been boosted by incentivised bank staff who have been pushing interest-only loans to customers.
With all of these forces and changes underway, falling prices are inevitable. They are currently being held up by the rising populations in Melbourne and Sydney, two continuously growing popular destinations. There is a continuously growing amount of foreign students moving to these places as there are tourists. Therefore, the banks and financial institutions are constantly trying to organise finance operations, which may be a factor to help keep the Australian property market strong.
So only time will tell what’s in store for the Australian property market and how foreign investors will respond to the heaps of changes.
Written by Gemma Smith