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Friday, November 25, 2016, 12:46

Chinese buyers flock to Australian property

By Reuters

Chinese buyers flock to Australian property
This photo taken on June 17, 2016 shows a worker holding a stop sign in front of an apartment block under construction in Sydney. (WILLIAM WEST / AFP)

SYDNEY - Australia's 'spring-selling' real estate season is seeing a steady return of Chinese buyers , undaunted by lending restrictions aimed at curbing their interest in the country's sky-rocketing housing market .

Financiers and estate agents say Asian investors have found new avenues to re-enter the market, including looking for cheaper homes and settling in cash. Others are turning to groups of wealthy individuals or foreign-owned banks for loans, after Australian banks turned off funding to overseas buyers this year.

Australia's 'spring-selling' real estate season is seeing a steady return of Chinese buyers, undaunted by lending restrictions

The renewed buying frenzy has re-ignited speculation that prices in one of the world's most expensive property markets are in a bubble, alarming regulators.

A Sydney apartment with Harbour Bridge views is now costlier than a similar home overlooking the Eiffel Tower or Miami Beach, research by property group Knight Frank shows.

"We're now seeing people even from mid-tier Chinese cities such as Chengdu or Shenzhen coming in to Australia and buying," David Chatterjee, director of Melbourne-based Lucror Property told Reuters. "Most of the house and land buyers that we see are cash buyers."

The Reserve Bank of Australia (RBA) has expressed concern that a booming apartment sector could be a key risk to financial stability with interest rates now at record lows.

Australian banks tightened funding to foreigners earlier this year, citing higher credit risks, causing offshore demand to almost dry up.

But Chinese buying inquiries have rebounded, up 34 percent in the September quarter for properties up to US$1 million compared with 12 percent in June, according to data from Juwai.com, China's largest international property website.

Australia's foreign investment rules guide overseas investors to buy new properties, such as "off-the-plan" apartments that are yet to be constructed.

SKY-HIGH RETURNS

Foreign-owned banks including United Overseas Bank and HSBC have stepped in to plug the gap left by the big banks, regulatory filings show.

A spokeswoman for HSBC said the majority of the bank's mortgage book was still local Australian customers. UOB did not respond to requests for comment.

Non-bank lenders are also eyeing the market, with consultancy Basis Point saying it has received numerous enquiries from non-bank lenders as well as borrowers.

"Property developers are calling us to ask who should they approach to borrow money while investors are looking for market intelligence to be able to originate loans," General Manager CT Johnson said.

Wealthy individuals are pooling together money to invest in Australian homes. Sydney-based corporate adviser Challis Capital this month branched into property investment after winning a A$100 million (US$74 million) mandate from a consortium of Asian private investors.

Non-bank lender Pepper Group this year sealed the biggest funding deal the sector has seen in a decade when it launched a A$700 million offer of residential mortgage-backed securities.

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