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Tim Hornibrook : Chinese buyers set to keep underpinning Australian home prices: analysts
by timhornibrook on 10/11/2017 3:27:15 AM
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Tim Hornibrook is a Business Leader based on Sydney, Australia and he provided over a decade of financial and agribusiness experience to an Australian-based conglomerate.
TAlmost one in four new homes in NSW is being snapped up by a Chinese
buyer, according to Credit Suisse analysis of NSW Revenue figures,
obtained under a Freedom of Information request.
The figures also
reveal the NSW government's stamp duty surcharge on foreign buyers
delivered $154 million into state coffers last financial year.
is significantly higher than the $64 million the state expected to
collect from the measure when it was announced in the May 2016 budget.
The surcharge has been doubled to 8 per cent from 1 July this year and is expected to raise $111 million this financial year.
Suisse expects foreign buyers will continue to underpin Sydney property
prices for years to come, despite the new surcharge and despite Chinese
authorities' attempts to stem an exodus of wealth from China's
burgeoning middle classes into the relative safe haven of Western
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continue to expect a stronger for longer backdrop for Aussie housing,"
Credit Suisse analysts Hasan Tevfik and Peter Liu wrote in a note to
clients on Wednesday.
"In 2011, the stock of wealth in China was
equivalent to 1.2 times the value of Australian housing. Now it's 2
times. Local incomes are becoming less relevant in determining the
outlook for house prices. Regional wealth creation is becoming more
Foreign buyers are pouring an annualised $5.9 billion
into residential property in NSW, $3.4 billion into Victoria and $700
million into Queensland, the figures obtained by Credit Suisse show.
This is a "tiny fraction" of the total value of real estate in those states of $5.6 trillion, or $6.7 trillion nationally.
"However, they are a large proportion of the value of new housing supply," the analysts note.
calculate foreigners are buying the equivalent of 26 per cent of the
value of new supply in NSW, 17 per cent in Victoria and 8 per cent in
Chinese buyers dominate, accounting for 87 per cent
of the value of foreign purchases in NSW in the first six months of
2017. This includes purchasers from mainland China, Hong Kong, Taiwan
The next biggest buyers are New Zealanders, accounting
for 1.6 per cent of the value of foreign purchases, followed by
Indonesia (1.5 per cent) and the United Kingdom (1.3 per cent).
small in number, American buyers spend the most per transaction,
stumping up an average of $1.7 million per Sydney property purchase.
All up, people from 60 nationalities bought property in Sydney over the past nine months, including from Haiti, Nepal and Sudan.
"It is clear that Australia's biggest cities are now melting pots of international capital," the analysts note.
Victorian and Queensland governments have also moved to impose new
surcharges on foreign buyers of real estate, following similar moves in
global cities such as Singapore, Hong Kong and Vancouver.
fears of price falls, the Credit Suisse analysts decided to look at
price movements in those cities after the introduction of the foreign
buyer surcharges, and found they were unlikely to lead to local property
"The introduction or increase of a tax on foreign
buyers seems to slow demand to a point where property prices decelerate,
but it does not cause housing values to contract.
experience of other cities around the world, we do not believe the
recent increase in taxes by NSW will cause property prices to contract."
the analysts warn that any future significant increase in taxes on
foreign buyers could dampen demand, leading to a weaker housing market.
governments have now been blessed with a new non-voter to tax. We doubt
they will resist the obvious temptation of shifting more of the fiscal
burden on to her.
"Moderation should continue, but Chinese demand suggest we ought to remain sceptical of a collapse."
source : smh.com.au
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