What gives? On the one hand, Australia is still supposed to be the 2nd highest destination for property investment for Chinese investors. On the other, they have very obviously, largely disappeared from the local Melbourne market.
Whilst tightening credit conditions are a major factor in the continuing slippage in prices that started in Spring 2017, the other very significant factor is the withdrawal of Chinese buyers from the market place. Whilst Melbourne prices are showing a fall of just a few percent over the last 12 months, this has been more substantial in the core area of Chinese interest over the last couple of decades, being the triangle formed by Balwyn, Doncaster and Glen Waverley. These areas have slid by more than 10% typically, whilst the outer suburbs of Melbourne have held up fairly well, due to affordability and the resurgence of 1st home buyers into the market (up almost 70% in NSW).
There are a couple of explanations for the apparent contradiction. The report that the following article is based on relates to 2017 and even it notes that investment in Oz is down 25% last year. It’s down a lot more now. Also, it includes the very large sites purchased for apartment developments, such as the proposed towers in Box Hill. The reduced numbers of buyers, tighter lending and negative press has resulted in better buying opportunities and the growing realization from sellers that they either meet today’s lower prices or they stay where they are. Welcome to the new normal…