Impact of Tighter Beijing Regulations on Australia’s Real Estate Market Exagerrated

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A top researcher has claimed that the impact of the demand coming from China on real estate properties in Australia has been overblown. There was the initial speculation in various finance and real estate sectors that stricter regulations in Beijing towards foreign investments could negatively affect the Australian real estate industry.

A professor from the Australia-China Relations Institute, James Laurenceson, spoke to Mortgage Business about the impact of China and how their government made it more difficult for their citizens to get money out of their country. According to Mr. Laurenceson, “The China factor in Australia’s property market, certainly in general, has been overblown. If there’s a pullback in Chinese investment over the next couple of quarters – I don’t think that’s going to have a dramatic impact.”

Mr Laurenceson further stated that investments from China has a small effect on the whole picture of the real estate market in Australia. He claimed that only “very small pockets” will be affected.

“There have been other bigger factors like record-low interest rates which have been encouraging Australian investors to put their money in property. I think those sorts of fundamental factors are going to continue to drive the real estate market, not Chinese investment,” Laurenceson added.

The professor also said that’s with regards to the changes in Beijing and how the Chinese government has made it more difficult for the Chinese to bring money out of their country, he feels this is a short term situation and that the nation’s capital is only “enforcing existing rules”.

He noted how in the past, the law in China stated that their citizens couldn’t send out more than US$50,000 each year. This rule was never enforced, according to Mr. Laurenceson. The recent tight regulations was simply an effort to enforce the “existing rules”.

The expert claimed that there will be a slowdown of investment stemming from China in the next one or two quarters, but in the grand scheme of things, he expects the Chinese will increasingly continue to invest in Australia in the years to come.

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