Advanced Search

Share Coverage



Category: Business, Economics and Finance / Economic Trends / Housing Industry

Tough new borrowing laws see Chinese investors opting for private lenders

Monday, 8 Aug 2016 15:46:46 | Emily Stewart

Chinese property investors are eyeing property markets including Melbourne. (774 ABC Melbourne: Simon Leo Brown)

Chinese property buyers are the biggest group of offshore investors, having spent $24 billion in the year to June 2015.

But many are now facing challenges of obtaining finance as the big four banks tighten their lending restrictions at a time when most Chinese buyers want to get their loans financed through Australian banks.

Often, Chinese buyers don't want the Communist Party to know exactly what they own, and Chinese residents are only allowed to take $50,000 out of the country a year.

"Whereas before they might have used to take overseas income as part of their allowance for paying off the loan a lot of banks have said no we're only looking at domestic income," BIS Shrapnel property analyst Angie Zigomanis said.

State governments in New South Wales, Victoria and Queensland have also introduced new surcharges and taxes for offshore buyers.

Government restrictions mean most purchase new developments in largely off-the-plan apartments.

"The changes have probably occurred over the last quarter, so there's a lot of developments we've dealt with recently that the purchasers weren't able to obtain finance probably at their expectations," said Marshall Condon, a mortgage broker who provides finance for development projects, including Chinese buyers.

With the banks out of the picture, private lenders in Australia are filling the gaps.

"At the moment it ranges from family offices that have high net worth clients (who) have few million dollars they'd like to lend out - but then we've also got private lenders who have sourced their money offshore or onshore and have lent their money in a private capacity as well," Mr Condon said.

Private lenders charge interest rates of up to 13 per cent, but analysts say that is cheaper than losing a 10 per cent deposit.

'Cheaper than Beijing, Shanghai'

Many property investors are buying in major Australian cities because of a lower comparative price and for convenience.

"Melbourne CBD is the key location — so convenient to everything and close to the University of Melbourne and RMIT University," said Fen Lin, who was in Melbourne for a pharmaceutical conference.

Mr Lin already owns one apartment in Melbourne and now he is looking for another.

"It's cheaper. Especially when it compares to Beijing, Shanghai and Guangzhou cities," Mr Lin said.

Real estate agent Yang Li regularly sets up stalls at China-related events around Australia and said half his clientele is from Asia.

"80 per cent of the investors who invest in Melbourne properties … they just trust the law, they reckon it's a proper economy here," Mr Li said.

"In the last couple of years Australian property market is really, really hot but I think from end of last year early this year it has cooled a little bit — due to bank policies," Mr Li said.

"It's hard to get money from the bank."

With a lot of supply coming online in the next few months, Mr Condon warns some will break their contracts.

"We might see a few more fall-overs and people not settling," he said.

"In saying that what we're hearing in the market — 50 per cent [of the offshore sales are] a bit of a concern."

AustraliaPlus


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend