Bank loan restrictions won’t stop Chinese property buyers
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Dec 30, 2015Duncan Hughes
On the home hunt with Chinese buyers
The New York times recently interviewed Chinese buyers who were looking to buy in another safe haven - the United States. Video: NY Times.
ANZ is making it harder for overseas buyers to get loans but the move is unlikely to curb Chinese interest in Australian property in 2016, property experts and banks say.
ANZ bank is clamping down on overseas buyers with temporary visas who want to buy residential and investment properties.
But Chinese property marketer Juwai.com expects Chinese investment into Australian residential property to
“set new records between now and 2020″.
Chinese property marketer Juwai.com expects Chinese investment in Australian residential property to set records between now and 2020. Photo: Ian Waldie
“It’s foolhardy right now to make a firm short-term prediction, because too much is happening and any single event internationally could create a boom or reversal in any given quarter,” Juwai.com co-founder Simon Henry said.
“But we are very optimistic for 2016 and even more so for the remaining portion of this decade,” he said.
“Our 2020 forecast for all Chinese international real estate investment, not just residential, is for $220 billion, which would be up more than fourfold from $52 billion in 2014.”
However, a decline in bank lending to investors and capital controls imposed in China might slow investments in the short term.
The ANZ move follows earlier lending changes imposed by all the big banks, such as lifting the amounts a buyer must have as a deposit, aimed at curbing riskier overseas buying.
“We are continuing to review our portfolio,” an ANZ spokesman said in a statement sent to mortgage brokers. “This is to ensure we respond to current market dynamics and align with regulator guidelines.”
The latest changes are targeting borrowers with temporary, or provisional visas, which can lead to the grant of a permanent visa. They allow the holder to stay in Australia for longer than 12 months.
Under the new restrictions the maximum loan-to-value ratio – a measure of the loan to the value of the asset being bought – has been reduced from 80 per cent to 70 per cent.
The bank has also increased the range of products for which temporary, or provisional visa holders, will not be eligible to include the Breakfree Home Loan Package and Simplicity PLUS, a basic variable home loan package.
Products still available include the fixed and standard variable home and residential investment loans.
The bank has told brokers that discretionary pricing might be available if there is “competitive justification for the request”.
Brokers say the latest changes are targeting the Chinese market, which has been spending billions of dollars on Australian residential property, particularly in Melbourne and Sydney.
Other measures have included reducing interest rate discounts, raising rate “sensitivity buffers” and ruling out some income, such as bonuses, when assessing an applicant’s ability to repay a loan.
Juwai.com hopes the end of the current Chinese capital controls, which it sees as temporary, will lead to more capital flowing into Australia.
“When they do cut back on the capital controls, a complete removal would deliver an extra estimated $75.7 billion to Australia’s residential real estate markets,” Mr Henry said.
