This article was first published by Lisa Murray on 22 Sept 2016 via afr.com.au | Image: afr.com.au
Chinese real estate agents who previously sold only Australian property to their clients are switching their focus to the United States and Europe in response to higher taxes and tougher lending requirements.
“Australia has become too hard for buyers and agents,” said AC Property director Esther Yong.
She has just returned from a trip to Shanghai and Nanjing, where she was marketing some new property developments to Chinese agents.
“More than half of the agents we deal with are now asking us to give them property from another market, particularly the US and the UK. They can no longer rely solely on Australia.”
Melbourne-based AC Property, which runs a Chinese language real estate portal, works with about 400 property sales and migration agents across China, according to Ms Yong. The recent shift in the market has prompted AC Property to look at expanding to the US.
“Previously Chinese buyers didn’t want to look at the US because they thought it was dangerous and too far away, but now it is comparatively easier to get financing and, in places like Houston, property can be sold for just $US200,000 ($A262,000).”
During May and June, the big four Australian banks began restricting lending to offshore buyers. Around the same time, the Australian Taxation Office introduced legislation requiring foreign residents to pay 10 per cent withholding tax on properties worth more than $2 million, while Victoria announced higher stamp duty rates.
Haiya He, a sales agent with Beijing-based Global House Buyer, said the tougher lending policies in particular were having “a significant impact on our business.”
“Lending costs have gone up considerably,” she said.
“Some of our clients are switching to other countries and those who have specific reasons to buy in Australia are taking a wait-and-see approach.”
Jim Huang, whose company Boxing Overseas has been selling Australian property to Chinese buyers for the past seven years, said there had been no warning about the change in lending policies, so they had taken the market by surprise.
“Apartments in Melbourne’s CBD have been particularly affected,” said Mr Huang, who divides his time between Melbourne and Nanjing.
“You just cannot get funds from the bank. It’s a big problem. Now agents are looking for property in Europe, Canada and the US.”
Last year, Boxing Overseas sold 300 Australian properties, but sales have slowed this year. In the first half, the company sold 50 properties and Mr Huang predicts that figure will be 15 in the second half. “It’s a disaster for agents just selling Australian property,” he said. “Five or six in Nanjing have already closed.”
Scott Kirchner, director of China operations for Australian property group Beller, says the company is “not doing any big marketing campaigns in China at the moment”.
“There is a lot less demand because buyers are finding it too hard,” said Mr Kirchner, who is based in Shanghai.
“One of the companies I work with in Shenzhen has always sold a little bit of property in Canada and the US but been mainly focused in Australia.
Now they are concentrating more on the US.
“Off-the-plan apartments are sold hard to investors and they are being affected.
“Also, those buyers with very young children, two or three years old, who are looking to buy a property for the future when their kids might be studying in Australia, are holding off,” he said.
However, Wang Ning, deputy general manager of SouFun International, which operates China’s largest overseas property sales web site, Fang.com, is optimistic interest in Australia will rebound.
“The market had a big fall in July and August,” she said. “Our Australian property transactions fell 30 per cent.”
Between 5 to 10 per cent of buyers have chosen to invest in other countries such as the US, Ms Wang said. However, most are delaying their purchases rather than abandoning the market.
While September sales for Fang.com are expected to improve, they will still likely be down about 10 per cent on last year.
“We are confident in Australian property,” said Ms Wang.
“It’s a major trend for investors to buy overseas because of the overheated domestic property market. Some of our clients are selling properties in China to buy overseas.”