Chinese property investors may see Brisbane as a more attractive option.
A recent media article is suggesting that new Chinese property investors may see Brisbane as a more attractive option.
Brisbane more appealing to Chinese property investors
Chinese buyers have been at their most active in the Melbourne apartment market over the last few years but it now appears that there are a number of issues that will slow down Chinese investment to such an extent that inner-city apartment projects will be shelved and sales may fall through.
Generally throughout Australia, various issues have been arising which have made it much more difficult for Chinese buyers. Foreign Investment Review Board rules have stated for some time that non-residents can purchase only new units and townhouses but until recently, the rule was not well policed. Even so, the Chinese have been prolific buyers in Melbourne’s off-the-plan apartment market. Just last week, Westpac announced it would stop writing mortgages to non-residents, while other major banks have reduced loan-to-value ratios and tightened eligibility criteria.
As Australian banks have been making it tougher for foreign buyers, the Chinese government is reining in money flowing through underground banks. The Chinese are only permitted to send $US50, 000 ($68,000) limit per person each year outside the country and with the crackdown on underground banks buying property investment in Australia is more difficult.
Now, on top of all this, the Victorian government introduced a foreign buyer stamp duty surcharge and then more than doubled it to 7 per cent in just a year!
All of the above has led to fears that Melbourne’s already over-supplied inner-city apartment market will see new projects shelved and existing off-plan sales may fall through.
The 7 per cent in just a year tax on foreign property investment is sending out the message that Victoria does not want any more Chinese investment. In comparing buying an apartment in Brisbane versus Melbourne, the foreign property investor is now $40,000 worse off, diluting Melbourne’s competitiveness one agent has said.
Considering the relative price points, over-supply and general finished quality and size of units, these foreign investors are probably going to be much better off putting their money in Brisbane anyway in the medium term.
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