The world’s most livable city (at least until the absolutely atrocious new carjacking statistics feed into the system) is also the second most popular city in the world for Chinese residents to buy property. A recent survey from an admittedly small but likely typical sample of investors, indicated we are back in fashion. We were briefly dropped down the pecking order as a result of a change to our major bank’s lending criteria mid last year. But there is no doubt about the underlying popularity of Melbourne to the Chinese. In particular, the suburbs in the middle of Melbourne’s east.
As usual however, Government restrictions to curb the demand tend to get worked around over time. In this instance, a new bank has stepped in the meet the demand not being met by our local big four. The newest restrictions, including the levy on empty homes (see earlier posts identifying this phenomenon) and the increase to stamp duty applicable to foreign residents does not appear to have had any significant effect yet. But keep a careful watch.
As with interest rate increases (which have just started in recent days), history shows there are a few that seem to happen, with no evident effect and then quite suddenly, for no clear reason, a single rise of typically just a quarter of a percent, results in a sudden change in sentiment. No dramatic change but from one day to the next, the mood has changed. Crowd psychology kicks in and the market has changed. It is unlikely that this will occur soon but it will happen if history teaches us anything.
For now, if you own a home, you can continue to feel good about that decision you made when you decided to buy. Patience to those still waiting to get into the great game of property. Your time will come.