Have you noticed a recent price growth in property market?
According to the data from CoreLogic, starting from January 2009, property price in Sydney soared by 106% whereas property price in Melbourne increased by 89%. You may wonder, what caused such a staggering increase?
When you have a closer look in this property market, it is not too difficult to discover that foreign buyers are the driving force of such increase. Credit Sussie, a leading financial services company, reveals figures on the property market in NSW, which suggests that foreign buyers took up 1,503 property settlements from October 2016 to January 2017 and they totaled $1.63 billion in value. Thus, foreign buyers are undoubtedly playing a crucial role in property market.
You would probably then question, what is the breakdown of foreign property markets?
As seen from the figure above, it is not unreasonable to conclude that foreign=China (Mainland China, Hong Kong, Macau, Taiwan). But do you wonder why Chinese are the most dominate foreign buyers?
Such a phenomenon can be attributed to a vast number of migration applications to Australia, which creates a great demand for housing. The living standard, environment and education in Australia have always been great attractions to Chinese. More importantly, as ANZ’s economists suggest, the lower Australian dollar has supported foreign investor demand for Australian housing. Therefore, it is not surprising that the influx of Chinese has impacted significantly on Australian property markets.
A noteworthy issue is that the Chinese government and Australian government have imposed several restrictions respectively. The Central Bank in China scrutinises capital transfers abroad worth $US5 million or more very carefully. At the same time, there are stamp duty adjustments for foreign buyers in NSW and VIC, while UBC economists also noted the tightened willingness to lend against foreign income. All these policies have made foreign investments more difficult, especially on Chinese investors.
However, when these policies are leading to significant retreat of investments, which hamper the housing market and many other relevant sectors, are these policies going to sustain for long?
If you are considering buying or selling property in Australia in the next few months, then you should engage with a lawyer (or conveyancer) as early as possible. For vendors, you need to get your Contract of Sale prepared. And for purchasers, it is highly recommended that you arrange for the Contract of Sale to be reviewed before you bid at auction, or put in an offer. Titlexchange are a national law firm that specialise in the transferring of property titles from one party to another. We offer fixed fee, competitively priced packages that endure you only pay for what you need. Drop us a line today and one of our team will give you a call.