Could it be that the Chinese Government’s crackdown on capital flight and corruption, combined with the New Zealand Government’s new rules for property investors, are working to put the clamp on Chinese property investment? Because, as reported in Interest.co.nz today, Chinese buyers appear to have deserted the market:
Where have all the Chinese buyers gone?
Their absence was particularly noticeable at this week’s apartment auction by City Sales.
The apartment resale market is still dominated by investors and over the last year or so it has become increasingly dominated by ethnic Chinese investors, so much so that the big apartment auctions have tended to look like Shanghai on a Saturday night.
But at this week’s City Sales auction there were only a couple of Chinese faces.
There were also noticeably fewer Chinese faces at this week’s Ray White City Apartments auction…
The same thing may be happening out in the suburbs.
During the week I spoke with an auctioneer who handles a large number of suburban homes.
He told me that he had auctioned 20 Auckland suburban properties in the last week or so and the Chinese buyers that had been thronging open homes and auctions until recently had become conspicuous by their absence.
“The Chinese have left the market,” he told me.
The New Zealand Government’s new rules for property investors came into force on 1 October, and:
- requires non-residents and New Zealanders buying and selling any property other than their main home to provide a New Zealand IRD [tax file] number;
- requires non-residents to have a New Zealand bank account to get a New Zealand IRD number;
- introduces a new “bright line” test to tax gains from residential property sold within two years of purchase, unless it’s the seller’s main home, inherited or transferred in a relationship property settlement.
Sure, it could be a coincidence that Chinese investment has dropped-off just as the new rules on property investment have come into effect.
But if not, it suggests that Chinese investment into Australian real estate could also roll over once Australia’s new foreign investment surveillance/enforcement regime comes into effect on 1 December 2015, with obvious negative implications for Melbourne’s/Sydney’s housing bubbles.
