The Australian central bank recognised the role of foreign buying, particularly by the Chinese, in influencing the ongoing housing downturn.
In a speech Wednesday, Reserve Bank Governor Philip Lowe noted how demand by non-residents have weighed on the continent’s residential property prices.
Investments by the Chinese in Australian real estate hit just AUD12.7 billion (USD9 billion) in 2017-18, down 17 percent from the AUD15.3 billion recorded in the previous year, data from Australia’s latest annual Foreign Investment Review Board report showed.
“The demand was particularly strong in Sydney and Melbourne, given the global profiles of these two cities and their large foreign student populations. More recently, this source of demand has waned, partly as a result of the increased difficulty of moving money out of China as the authorities manage capital flows,” Lowe said.
“The timing of these shifts in foreign demand has broadly coincided with – and reinforced – the shifts in domestic demand.”
The unexpected canceling of promised mortgage loans by Australian banks, higher foreign stamp duty taxes, and capital controls made for more difficulty moving money outside China, according to Carrie Law, CEO and Director of Juwai.com.
While Chinese demand for residential real estate has fallen, China still accounts for one out of every four dollars of foreign real estate investment in Australia, FIRB data showed.
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