Chinese property investors have been key players in some of the world’s biggest property markets in recent years.
And given Australia’s regional proximity, the booming Sydney and Melbourne markets have been two of their main targets.
Despite the Chinese government crackdown on foreign investment outflows, information obtained by Credit Suisse via a Freedom of Information Request in October indicated that Chinese buyers were still snapping up a quarter of all new housing supply in New South Wales.
Chinese buying interest has led to various federal and state governments around the world to impose their own restrictions, partly in an attempt to stop the flood of Chinese money from distorting market fundamentals.
This table from ANZ — with a corresponding legend — provides a neat summary of the strategies implemented to reduce Chinese investment:
Based on the number of controls in place, it’s clear that authorities for the larger housing markets in Australia and Canada have prioritised stemming the flow of Chinese buyers.
When a new apartment development goes up in Sydney or Melbourne, sales to foreign investors are capped at 50% of all the apartments available.
Chinese buyers are also required to make higher down-payments on their property, and in the second half of last year the state governments of NSW and Victoria further increased stamp duty on foreign investment.
And Sydney, Melbourne and Vancouver are the only three cities on the list encouraging foreign owners to increase rental supply by introducing penalties for properties left vacant.
It’s not immediately clear how such an initiative would be policed, although the Australian government’s 2017/18 budget said penalties will be administered by the Australian Tax Office.
In a speech last November, the RBA’s head of financial stability, Jonathan Kearns, estimated that sales to foreign buyers account for around 5% of total housing sales.
That figures increases to around 10-15% for sales of new housing, and around 25% for new apartment sales.