Chinese migrants have re-emerged as a major buying force in Melbourne’s top end housing market, despite the Chinese government’s crackdown on money leaving the country.
Over the past week, Chinese buyers snapped up two Toorak mansions – 2 Heymount Close and 9 Hill street – for about $15 million each at private auctions.
Melbourne buyer’s agent David Morrell, who bid on behalf of local buyers at these “lounge room” auctions, said his clients had been “blasted out of the water” by Chinese buyers, bidding against each other, who could not speak a word of English.
“Chinese buyers are back and are really distorting the market. I can’t fathom what they are doing, it’s not a fair and open market” he said.
Mr Morrell said in the case of 2 Heymount Close, a four-bedroom home on 2322 square metres, the quoted price guide was $13 million plus. “We can’t make the numbers they are paying stack up,” he said.
He added that he did not believe the Chinese buyers had permission to purchase the properties. “I can tell the difference between a local Chinese buyer and a [mainland] Chinese buyer,” Mr Morrell said.
The 2 Heymount Close and 9 Hill Street properties were marketed by Mike Gibson, managing director at estate agents Kay & Burton.
Mr Gibson said in both cases the buyers met the residency requirements to purchase the properties. Overseas buyers need to be temporary or permanent residents to purchase existing property in Australia.
“We certainly ask them [if they have permission]. Sometimes they buy subject to Foreign Investment Review Board approval.”
Mr Gibson added that Kay & Burton had sold over $50 million worth of Toorak property recently and not all had been bought by Chinese buyers. “Local buyers have been stronger this year than last year,” Mr Gibson said.
Mr Morrell said his strategy when competing with Chinese buyers was to “get in and mix it up with them…and demand to know if they have FIRB approval to buy the property.”
Last month, Federal Treasurer Scott Morrison ordered the forced sale of 15 Australian residential properties in Victoria and Queensland illegally held by foreign nationals from China, India, Indonesia, Iran, Malaysia, the UK and Germany taking total sales to 61 worth $107 million.
The 15 latest properties, located in Victoria and Queensland, had a combined purchase price of more than $14 million. The foreign owners come from a range of countries including China, India, Indonesia, Iran, Malaysia, the United Kingdom and Germany.
Since the end of last year, the Chinese government has sought to stem the outflow of money out of China to prevent the devaluing of the Yuan.
However, many Chinese investors appear to have found a way to get the money out with a high proportion paying cash to settle new apartments after the major banks stopped lending to them.
Concerns about potential money laundering has seen Westpac and its subsidiary banks implement new requirements including that mortgage brokers ask clients for country of tax residency and tax identification numbers.
Last week, a senior Chinese police officer was sentenced to 17 years in jail over bribery charges. He used the illegal proceeds to buy two homes in Australia. Read more: http://www.afr.com/real-estate/residential/vic/chinese-property-buyers-back-in-melbournes-top-end-20170317-gv0cav#ixzz4c3DAHmlM