Saturday, June 14, 2014

China Impact

Four recent articles in the AFR are of interest in relation to the impact of China on Australian property.

"Spike in approvals for foreign investment in housing" (AFR, 12 June 2014, p. 36): The FIRB has approved a big jump in applications to buy Australian housing.  In dollar terms, the investment approved is up 67%.

"Chinese buyers key to market: Triguboff" (AFR, 12 June 2014, p. 36):  Meriton raised the issue of whether those who were allowed to buy homes because they were temporary residents, sold them when they ceased to be Australian residents.  In the 2012-13 year, 43.7% of FIRB approvals were for temporary residents to buy established dwellings, because foreign buyers who do not have permanent residency, can only buy new homes.  Meriton pointed out that the annual report of the FIRB did not report on compliance.

"We are part of the Chinese market.  The buyers compare me [Meriton] with the prices in Shanghai and Beijing.  If the price falls in China, that will affect us," Mr Triguboff said.

"China's housing vacancies signal property bubble" (AFR, 12 June 2014, p. 10): A report estimates that there are 49 million vacant homes in China, resulting in a vacancy rate of 22.4%.  "Once expectations change, the high vacancy rate will puts lots of pressure on prices and we could see them collapse."

"President targets naked civil servants" (AFR, 11 June 2014, p. 14): A group of Chinese bureaucrats, dubbed the luoguan or naked officials have become the latest target of President Xi Jinping.  They move their families and money to foreign countries.  "No one know how much this new approach will affect universities and real estate markets in favoured destinations like Australia as the numbers are hard to pin down.  But they are not small."  There are estimated to be about 1.2 million naked officials at the end of 2012.

"House prices second highest in the world" (AFR, 12 June 2014, p. 5): Australia may have the world's second-most expensive housing market behind Belgium, according to the IMF.

No comments: