How will China’s investment crackdown affect local property?

As the Chinese government cracks down on international property investment, tighter restrictions and lower investor numbers may affect the Australian property market as well.

While the situation will be complicated by the ongoing back-and-forth battle between the Chinese government and investors, the most likely scenario will be a slowdown in incoming cash flow for the first half of 2017, CT Johnson, general manager for business intelligence agency Basis Point, told Australian Broker.

He continued saying that cash flow levels will likely return to normal afterwards.

How this would exactly affect the Australian property market was difficult to tell however since there was a distinct lack of information on the subject, he added.

“No one has put together a good analysis of the impact of Chinese buyers on the Australian market.”

While the Foreign Investment Review Board released a study claiming foreign buyers had no appreciable impact on price increases in the Australian property market, Johnson said the report’s methodology was unclear, making it difficult to determine how they reached that conclusion.

“At the end of the day, there are a lot of people who want to buy into Australia, particularly into the capital markets – Melbourne, Sydney and Brisbane particularly – so there will be a lot of demand there,” he said.

“What I expect is that it will drag down the rate of increase in housing prices in Australia. I believe that there will be more pressure on high density, off-the-plan buildings. I expect to see zero impact on the other end of the scale – land and house type developments.”

This means that although the Chinese crackdown will have some impact in Australia, it will not cause nationwide change, he said.

By Miklos Bolza | Source: AustralianBroker


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