The low Aussie dollar is being credited with offsetting the cost of foreign buyer charges, prompting renewed interest from Chinese property buyers.
The first signs of year-on-year growth in Australian property among Chinese buyers since 2017 comes as the Australian dollar hovers below the US70 cents level and down 11.1 per cent since July last year against the Chinese yuan.
“A buyer holding yuan today needs the equivalent of $88,800 less in funds compared with 2017 to purchase an $800,000 dwelling,” said Carrie Law, chief executive of international real estate search company Juwai.com.
Foreign buyers are slugged an 8 per cent surcharge on all property purchases in NSW and Victoria, equating to more than $95,000 on an $800,000 dwelling.
Juwai reports year-on-year growth in inquiries on Australian real estate for the six months to March, the first time consecutive quarters have risen since the Chinese market bottomed out in late 2017.
“Juwai.com expects Chinese buying to remain essentially flat in 2019 … and to begin growing again with the market recovery.” Ms Law said.
The expat community are traditional buyers when the dollar falls below US70 cents, however they have failed to materialise en masse this year.
Veronica Morgan, of Good Deeds Property Buyers, says it doesn’t matter how low the Aussie dollar goes while there are capital gains tax changes hanging over the market, and many of those clients who would like to transact often can’t get finance to do so.
Treasurer Josh Frydenberg is pushing ahead with proposed laws that remove the capital gains tax exemption for foreigners and non-resident Australians which were part of a raft of housing affordability measures announced in 2017.
The amended Treasury Laws Amendment Bill was introduced to Parliament early last year and was expected to come into effect this month before the election interrupted proceedings, however a spokesman for the Treasurer said it remained government policy.
“Everyone’s sitting on their hands,” said buyers’ agent Nicole Jacobs, of her Melbourne-based eponymous agency. “We look after a lot of bankers specifically and they tend to be quite skeptical and risk-averse at the moment.”
Brett Evans, managing director of Brisbane-based expat financial services specialist Atlas Wealth Management, said his expat clients were repatriating funds to Australia to make the most of the weak dollar but, given uncertainty surrounding Australia’s tax regime, were opting out of property investment.
“As such, they are considering other Australian investment options like shares and exchange traded fund portfolios that do not attract the same punitive taxes as property,” he said.
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