Property developers are discretely offering discounts on apartments in Brisbane, Melbourne and Perth to Chinese buyers for the first time, in a sign lending restrictions and over-supply are beginning to affect prices.
One Melbourne developer is also offering a generous 25-year rental guarantee in a bid to lure Chinese buyers back to the market.
The price discounts of up to 7 per cent were offered to clients of China’s biggest online real estate agency, Fang.com, late on Friday night in an effort to clear stock before year’s end.
“This is the first time we have offered cash discounts,” said Fang.com agent Edward Shang.
Developers usually offer free stamp duty or one to two-year rental guarantees as incentives rather than discounts, which affect valuations for those who have already purchased a property in the complex.
What does it mean when supply is offering billion-strong demand discounts to buy? That something has gone badly wrong, via the AFR:
Local tightening, Chinese capital account tightening, massive oversupply, a moribund economy, falling prices, immigration backlash. How inviting!
If you want in to this fabulous investment opportunity then you need your head read but here’s an easy option to take on this mushrooming risk:
Real estate financier Qualitas, backed by Carol and Alan Schwartz, has seeded a start-up that allows small investors to offer home loans to Asian buyers shunned by the major banks.
Peer Estate, founded by former Qualitas executive Adam Broder and ANZ banking tech expert Phil Aarons, and seeded with Qualitas funding, is an online marketplace where investors can provide as little as $5000 to fund a first mortgage for an overseas buyer.
“Property debt is an asset class everyone understands. However, historically in this country only the ultra-wealthy or institutions have had the ability to secure the outsized returns for relatively low risk from this asset class,” Mr Broder told told The Australian Financial Review.
Clearly not everyone understands it, most notably Mr Broder.
