With Chinese off the plan in freefall, Investorist sees hope in Indian buyers

With Chinese off the plan in freefall, Investorist sees hope in Indian buyers
With Chinese off the plan in freefall, Investorist sees hope in Indian buyers

Indian foreign buyers of off-the-plan apartments are expected to triple next year in Australia.

It comes as off-the-plan apartment online selling platform Investorist notes Chinese buyers in decline.

Indian buyers currently rank as a key market with just six percent of developers but some 21 percent of developers see greater Indian foreign buyers this financial year, with continued growth from Vietnam, New Zealand and Indonesia.

With Chinese off the plan in freefall, Investorist sees hope in Indian buyers

"Sellers are scrambling to uncover the next big wave," Investorist boss Jon Ellis noted.

Last July Ellis forecast a 43 per cent plummet in demand from offshore Chinese.

After a slow 2017 and first half of 2018, most of the 201 sellers and channel marketers surveyed by Investorist in this year's report hope and expect new apartment sales to improve in 2019, although many will comprise nomination onsales, or sales which did not settle, not necessary new sales, the report adds.

"The market fully expected there would be a rebound shortly after the stamp duty changes took effect, but in reality this was minor," Investorist chief executive Jon Ellis noted.

Investorist found a third of all foreign buyers were discouraged by the lack of bank loans and increased in stamp duty surcharges. 

"The coming 12 months set to be just as bumpy as those preceding..... the banking royal commission has set the stage for lending to again be the single biggest hurdle to sales," the report noted.

Ellis noted it is important to understand that ‘slowed’ does not mean stopped completely with Chinese buying interest.

"Due to the sheer size of China’s population (approx 1.4 billion) there are still enormous numbers of Chinese investors seeking to buy property in Australia, and their motivations are strong enough to outweigh these barriers to purchase.

"Motivations include buying property for their children during university study, asset safety and diversification, future immigration and taking advantage of favourable exchange rates.

"A significant number of individual Chinese investors or family groups are also cash buyers, and thus do not require any loan funds to buy property."

Melbourne was the biggest off the plan market in 2017 and investors, both local and foreign, dominated off-the-plan sales nationally, at around 60 per cent of all buyers.

"Declining investor demand has marked a real paradigm shift after the boom times of the past few years," the report noted.

At the end of March, the the off-the-plan market was worth about $70 billion while the total residential real estate market was valued at $7.5 trillion.

The report noted the marketplace ‘sweet spot’ as between $400,000 to $600,000.

Official FIRB data recently confirmed a collapse in approvals for foreign investment in Australia’s housing market.

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