Foreign interest in Australian housing has dropped by more than 50%

[jhungary]

© Provided by Business Insider Inc The number of foreign investment applications for residential housing has fallen sharply.

The government, and regulators, have recently deployed a series of measures aimed at cooling Australia's booming property market. And authorities in China have been cracking down on the amount of money flowing out of the country.

In a major pre-budget speech today, treasurer Scott Morrison revealed that the number of foreign investment applications for residential housing has fallen to an expected 15,000 this year from 40,000 last year.

According to research by Credit Suisse, foreigners had been buying property at an annualised rate of $8 billion, equating to 25% of new supply in New South Wales and 16% in Victoria in the past 12 months.

"We are already seeing signs the heat in our housing markets may be coming off, especially in the apartment market," says Morrison.

"Cooling foreign investor interest, due to tougher foreign investment rules implemented by our government and capital outflow restrictions in China, are already having an impact."

Morrison says it’s imperative a scalpel rather a chainsaw is used when it comes to dealing with pressures in the housing market.

"The government’s approach uses carefully calibrated measures and does not run the risk of causing a broader housing shock that would undermine economic confidence, negatively impact household consumption and hinder economic growth," he says.

China’s central bank late last year started vetting capital transfers abroad worth $US5 million or more. Previously, only transfers worth $US50 million were required to be reported to authorities.

Those restrictions were tightened further at the beginning of this year with regulators stipulating that people could not purchase foreign exchange for overseas investment, including for buying houses.

And in Australia, the government has been forcing sales of established properties bought by foreigners in breach of investment rules.

Other moves to take the heat out of the property market include limiting interest-only mortgage lending and lending generally for property investments.

The big banks last month increased interest rates for investment properties. And three of the big four increased rates for owner-occupiers.

Housing affordability is now a significant political issue, with several measures expected in the May federal budget to help first home buyers.

Reserve Bank of Australia governor Philip Lowe says reducing demand-supply imbalances in Australia’s housing market are the only solution when it comes to improving housing affordability.

Sydney house prices have increased by 20% over the last 12 months and are up by more than 100% since the GFC in 2009.




Better days ahead for economy: Morrison


MORE FOR YOU

http://www.msn.com/en-au/money/home...0percent/ar-BBAq2Id?li=AA54Gb&ocid=spartanntp

Maybe it's time to buy a investment property?

 

[pak-marine]

© Provided by Business Insider Inc The number of foreign investment applications for residential housing has fallen sharply.

The government, and regulators, have recently deployed a series of measures aimed at cooling Australia's booming property market. And authorities in China have been cracking down on the amount of money flowing out of the country.

In a major pre-budget speech today, treasurer Scott Morrison revealed that the number of foreign investment applications for residential housing has fallen to an expected 15,000 this year from 40,000 last year.

According to research by Credit Suisse, foreigners had been buying property at an annualised rate of $8 billion, equating to 25% of new supply in New South Wales and 16% in Victoria in the past 12 months.

"We are already seeing signs the heat in our housing markets may be coming off, especially in the apartment market," says Morrison.

"Cooling foreign investor interest, due to tougher foreign investment rules implemented by our government and capital outflow restrictions in China, are already having an impact."

Morrison says it’s imperative a scalpel rather a chainsaw is used when it comes to dealing with pressures in the housing market.

"The government’s approach uses carefully calibrated measures and does not run the risk of causing a broader housing shock that would undermine economic confidence, negatively impact household consumption and hinder economic growth," he says.

China’s central bank late last year started vetting capital transfers abroad worth $US5 million or more. Previously, only transfers worth $US50 million were required to be reported to authorities.

Those restrictions were tightened further at the beginning of this year with regulators stipulating that people could not purchase foreign exchange for overseas investment, including for buying houses.

And in Australia, the government has been forcing sales of established properties bought by foreigners in breach of investment rules.

Other moves to take the heat out of the property market include limiting interest-only mortgage lending and lending generally for property investments.

The big banks last month increased interest rates for investment properties. And three of the big four increased rates for owner-occupiers.

Housing affordability is now a significant political issue, with several measures expected in the May federal budget to help first home buyers.

Reserve Bank of Australia governor Philip Lowe says reducing demand-supply imbalances in Australia’s housing market are the only solution when it comes to improving housing affordability.

Sydney house prices have increased by 20% over the last 12 months and are up by more than 100% since the GFC in 2009.




Better days ahead for economy: Morrison


MORE FOR YOU

http://www.msn.com/en-au/money/home...0percent/ar-BBAq2Id?li=AA54Gb&ocid=spartanntp

Maybe it's time to buy a investment property?

Wait for the Bubble burst , there will be a correction

 

[jhungary]

Wait for the Bubble burst , there will be a correction

Waiting on it....for a long time.

I bought the current home I live in for like A$700,000, when the foreign investment buying home in frenzied rage. 10 years ago, my home would have been only A$200,000 thanks for these foreign investor, which mostly Chinese. It reaches 300% when I get one.

Now the foreign frenzies is dying down. I am looking to buy another home to invest.

 

[patero]

Waiting on it....for a long time.

I bought the current home I live in for like A$700,000, when the foreign investment buying home in frenzied rage. 10 years ago, my home would have been only A$200,000 thanks for these foreign investor, which mostly Chinese. It reaches 300% when I get one.

Now the foreign frenzies is dying down. I am looking to buy another home to invest.

My brother's accounting practice specializes in property investors, about half of our new overseas clients are coming from Australia. We work with a network of investors, some set up syndicates to pool resources for financing.

You can do the research yourself if you are interested, the New Zealand property market has a lot of advantages for Australian investors. Setting up a company here is much easier ($100 fee, less red tape), we set up everything for our clients and administer the company through a trading trust (something you cannot do in Australia). There is no capital gains tax in NZ, no stamp duty, better yields, no restrictions on foreign ownership of residential property, better long term economic prospects and just released today were New Zealand's migration stats-the real driver of the property market here.

http://insights.nzherald.co.nz/article/rising-work-visas-nz

 

[jhungary]

My brother's accounting practice specializes in property investors, about half of our new overseas clients are coming from Australia. We work with a network of investors, some set up syndicates to pool resources for financing.

You can do the research yourself if you are interested, the New Zealand property market has a lot of advantages for Australian investors. Setting up a company here is much easier ($100 fee, less red tape), we set up everything for our clients and administer the company through a trading trust (something you cannot do in Australia). There is no capital gains tax in NZ, no stamp duty, better yields, no restrictions on foreign ownership of residential property, better long term economic prospects and just released today were New Zealand's migration stats-the real driver of the property market here.

http://insights.nzherald.co.nz/article/rising-work-visas-nz

A bit complicated in my situation, as an American, the IRS Tax overseas profits. Which mean any sort of business activities would be accountable for this, and we already have business back in the US, in China, in Sweden and in Australia. I would not want to establish another business anywhere.

On the other hand, buying investment property will not count as business activities (since the IRS removed it to stem EB-5 Immigration visa to the US several decade ago, when people migrate to the US only buying and letting properties instead of really doing business) That mean the rent I receive will not be taxed by IRS (Will still be taxed by ATO) and that is why I want to get another home so I can rent it out.

 

[patero]

There are good reasons why we set up our clients with trust structures. I'm not supposed to tell you this (you're supposed to figure this out yourself, nudge nudge wink wink), but there is no legal way the ATO can know about it. The trust itself is taxed in NZ. You won't get penalized for non-disclosure because you technically aren't the owner of the property, your trust is (via the trading company which is the trustee).

 

[Gibbs]

No surprises the property boom was essentially created by Chinese property investments

Another trend i have noticed in the last decade or so is the number of apartments and houses bought by Chinese as residents for their children studying in Australia, Especially in South Eastern suburbs of Melbourne, More or less these have been short term investments

 

[Blacklight]

Among english speaking countries, Australia is one of the most racist, I for one would never go there. Surprisingly, kiwis next door are the exact opposite.

 

[jhungary]

There are good reasons why we set up our clients with trust structures. I'm not supposed to tell you this (you're supposed to figure this out yourself, nudge nudge wink wink), but there is no legal way the ATO can know about it. The trust itself is taxed in NZ. You won't get penalized for non-disclosure because you technically aren't the owner of the property, your trust is (via the trading company which is the trustee).

lol, don't need to tell me that lol, I am/was surrounded by CPA (Think I have told you that before in our Movie Business exchange)

It's not about owning a company under your name, but how to bring the profit back to my account after they were made, they taxed income, meaning unless I launder the money somehow, they will flag my income for tax. Plus I have business in the US that related to my bank account in Australia, this is a bit risky.

No surprises the property boom was essentially created by Chinese property investments

Another trend i have noticed in the last decade or so is the number of apartments and houses bought by Chinese as residents for their children studying in Australia, Especially in South Eastern suburbs of Melbourne, More or less these have been short term investments

Yes, the Chinese is why we have such an expensive house price now.

How this works is that the Chinese will buy a few apartment (3, 4, or 5) which at low tide, cost no more than 1 millions AUD, then the Chinese buyer will either individually or buy as a group in the same suburb they have apartment and start buying house in more than market value, thus pushing up the sale price in that suburb, then they will sell the apartment and earn 200-300% value when they bought it. And finally sell the house. Even if they sell the house cheaper than when they bought it, the selling of their apartment over 2-3 fold the buying price guarantee a return on their investment.

It may not be that much for 3, 4 or 5 apartment, but when you have hundred people doing it, and at a rate they do 5, 6, or 7 apartment and they push the price together, it will rattle the market.

The federal government should have control the Chinese buyer a long time ago....Not when they bump the house price for more than 3 fold...

 

[Blacklight]

lol, don't need to tell me that lol, I am/was surrounded by CPA (Think I have told you that before in our Movie Business exchange)

It's not about owning a company under your name, but how to bring the profit back to my account after they were made, they taxed income, meaning unless I launder the money somehow, they will flag my income for tax. Plus I have business in the US that related to my bank account in Australia, this is a bit risky.



Yes, the Chinese is why we have such an expensive house price now.

How this works is that the Chinese will buy a few apartment (3, 4, or 5) which at low tide, cost no more than 1 millions AUD, then the Chinese buyer will either individually or buy as a group in the same suburb they have apartment and start buying house in more than market value, thus pushing up the sale price in that suburb, then they will sell the apartment and earn 200-300% value when they bought it. And finally sell the house. Even if they sell the house cheaper than when they bought it, the selling of their apartment over 2-3 fold the buying price guarantee a return on their investment.

It may not be that much for 3, 4 or 5 apartment, but when you have hundred people doing it, and at a rate they do 5, 6, or 7 apartment and they push the price together, it will rattle the market.

The federal government should have control the Chinese buyer a long time ago....Not when they bump the house price for more than 3 fold...

So how about buying a piece of land and building on it. Wouldn't that be cheaper?

 

[Viet]

Waiting on it....for a long time.

I bought the current home I live in for like A$700,000, when the foreign investment buying home in frenzied rage. 10 years ago, my home would have been only A$200,000 thanks for these foreign investor, which mostly Chinese. It reaches 300% when I get one.

Now the foreign frenzies is dying down. I am looking to buy another home to invest.

Similar in Germany, house prices have gone crazy. Singapore is a good place. I would buy there. Not putting everything in one basket.

 

[jhungary]

So how about buying a piece of land and building on it. Wouldn't that be cheaper?

Will be cheaper, but it will also be taking longer, if you build a new home on a vacant lot, you need to get council approval, and that mean you will be expose to heck a lot of red tapes, they want their suburb to build the way they like and most likely you don't like the way they do stuff.

Some people actually waited for 5 years to get an agreement on the blueprint then it will take a year or 2 to build it.

Similar in Germany, house prices have gone crazy. Singapore is a good place. I would buy there. Not putting everything in one basket.

don't want to make any more foreign investment....

 

[Blacklight]

Will be cheaper, but it will also be taking longer, if you build a new home on a vacant lot, you need to get council approval, and that mean you will be expose to heck a lot of red tapes, they want their suburb to build the way they like and most likely you don't like the way they do stuff.

Some people actually waited for 5 years to get an agreement on the blueprint then it will take a year or 2 to build it.

Outsource it, give it to a contractor, with time bonuses. Build it, then sell it.

 

[jhungary]

Outsource it, give it to a contractor, with time bonuses. Build it, then sell it.

You cannot build anything unless council approve your blueprint. It does not matter if you are using contractor or not. They will have to approve your blueprint, then you can build it.

You either submit your own or you can pick one form the local council, even if you pick one from your local council, you still need 2 to 3 years to finish your home.

But if you insist on your own print, then it will take much longer.

 

[patero]

lol, don't need to tell me that lol, I am/was surrounded by CPA (Think I have told you that before in our Movie Business exchange)

It's not about owning a company under your name, but how to bring the profit back to my account after they were made, they taxed income, meaning unless I launder the money somehow, they will flag my income for tax. Plus I have business in the US that related to my bank account in Australia, this is a bit risky.

I can't go into details on a public forum, but we have dealt with these issues before with clients from numerous countries. There is always tax to pay, the question is where do you decide to pay it. And investing decisions are more complex than just the tax planning.

I'm not trying to solicit your business BTW, but the comparative analysis of the two countries respective property markets is quite soundly in favor of New Zealand. There is a reason we are getting so many investors from Australia buying over here, particularly from WA.