Chinese new housing purchasing to ensure Sydney and Melbourne markets remaining stronger for longer

Chinese new housing purchasing to ensure Sydney and Melbourne markets remaining stronger for longer
Chinese new housing purchasing to ensure Sydney and Melbourne markets remaining stronger for longer

Foreign buyers, mostly Chinese, are buying a quarter of new housing supply in NSW, with Credit Suisse forecasting a "stronger-for-longer" scenario for the housing sector.

After analysing foreign buyer receipts, the trend is also strong in Victoria, with foreign buyers accounting for the purchase of 17 per cent of new housing. In Queensland, it is 8 per cent.

"Almost 90 per cent of foreign demand is from China and there is little evidence that new capital controls by the Chinese authorities, announced in December 2016, have slowed demand for Aussie housing," the analysts, Hasan Tevfik and Peter Liu advised.

"We think the tailwind of Chinese wealth creation will mean more, not less, foreign buying of Aussie housing.

"Chinese demand suggests we ought to remain skeptical of a collapse," they wrote.

"Residential exposed companies should benefit including the developers, building material companies and banks."

Using Freedom of Information requests the Credit Suisse report collates tax receipts collected by the state revenue offices in the three east coast states in 2016-17 financial year.

It found foreign buyers bought $5.9 billion in residential property in NSW, along with $3.4 billion in Victoria and $700 million in Queensland.

While the housing market, is worth $5.6 trillion in the three east coast states, the report notes, it represents a large proportion of the value of new housing supply.

From July 1 this year, NSW doubled the stamp duty on foreign buyers to 8 percent and increased the land tax surcharge from 0.75 per cent to 2 per cent.

Victoria and Queensland impose taxes on foreign buyers of residential property of 7 percent and 3 percent, respectively.

On the question of whether the recent increases in tax will be enough to reconsider and cause house prices in Sydney to decline, Credit Suisse advised international experience suggests not," the Credit Suisse analysts wrote.

Tags: 
Foreign Buyers Chinese Buyers

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