CHINESE demand for Melbourne property is forecast to cool over the next six months as the market adjusts to changing conditions before bouncing back again.
Victoria’s removal of stamp duty concessions on off the plan purchases paired with tightened bank lending will cause a drop in Chinese buyers in the market segment’s favourite Australian city, according to Investorist founder and chief executive Jon Ellis.
The business-to-business real estate website has launched its “China 2017 International Property Outlook” report, which polled 120 Chinese agents who sold 10,540 units in 2016.
A majority 83 of those agents said they were currently selling property in Australia — ahead of 71 in second placed USA — but only 47 said they would sell here in the next 12 months.
Mr Ellis said Melbourne would be “hit hardest of all states” due to its removal of off-the-plan concessions but believed it would bounce back and remain the most popular city.
“The No. 1 reason for Chinese buyers coming to Australia is education (according to the report) and Victoria still has some of the country’s finest education institutions, University of Melbourne and Monash University are both held in extremely high regard offshore,” he said.
“The second reason is actually migration … I think Victoria stacks up very well from an education perspective and it’s the most liveable city in the world.
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“A couple of per cent on tax won’t change that over the long term, what it does is create a level of uncertainty in the eyes of the purchaser and their perceived value for money in relation to other cities.”
Mr Ellis said Melbourne was competing against international hubs including Manchester, Miami and California for Chinese investment dollars.
Locally, he expected the gap between Melbourne and Sydney — Australia’s second-most popular city with Chinese buyers — to widen further moving forward.
The report states Melbourne, Sydney and Brisbane accounted for 90 per cent of all Australian off the plan purchases in 2016.
Gold Coast, Adelaide and Perth were reported as smaller investment markets.