Off-the-plan Apartments

Market Update - Nathan Han

12.11.2019

Hi, I am Nathan Han from Three Sixtyº Property Group. I am a successful project marketer, focusing on off-the-plan projects over the past 5 years. I will be regularly sharing my opinions with you on the state of the market, property trends, design ideas, buyer preferences and foreign buyer updates.

I am an expert on the Asian market and buyers. If you would like to talk with me more specifically about what Asian buyers like most, where they prefer to live and invest, what the most popular layouts currently are and what features will help your project be most successful with Asian buyers, then please look out for my future updates or call me anytime to discuss your next project. In the meantime, enjoy my first newsletter.

Over the last two years we have experienced significant sales slowdown due to the following:

Restrictions imposed on lending to foreign buyers by local banks with stringent policies around proof of income and serviceability;

The Australian Prudential Regulation Authority (APRA) put a temporary cap on investment loans;

Restrictions on bank lending as a result of the royal commission to both local and offshore buyers;

Additional foreign Stamp Duty surcharge of 3% imposed, increasing foreign premium to 8%;

Town planning changes that changed the plot ratio on sites lowering yields and effecting project viability thus restricting supply of new projects; and

Chinese government crackdown on foreign investment outflows.

Australian property market has turned the corner and we have witnessed a significant improvement in the property market with strong price growth in the country's two largest property markets showing no signs of abating, with Melbourne recording a 2.3% increase in housing values over the month of October, its strongest rate since 2009, followed by Sydney with a rise of 1.7% (source: CoreLogic).

Chinese buyers are starting to flock back into Australia's 'cheap' property market – with one city emerging as their clear favourite. Melbourne is the most popular city for Chinese buying enquiries in Australia. Chinese buyers make 83% more enquiries about acquiring Melbourne property than they do in Sydney, according to a recent survey conducted by popular Chinese real estate portal Juwai. Over the last two months, we have witnessed a significant increase in the number of sales to Chinese buyers across our projects in Melbourne and are continuing to look for new project opportunities for our Chinese clients.

A perfect storm is driving Chinese interest in Australian property:

Evidence the market has bottomed out and pricing is cheap and rising;

Restrictions on supply with Melbourne apartment completions the lowest in 6 years (source: Australian Financial Review October 29^th, 2019) meaning improved rental returns and price growth;

Historical low interest rate cuts by RBA to 0.75% which not only boosts first home buyers to enter into the market but also release more money for the property owners/investors as they pay less repayment every month, so they have more spare money to continue to invest in the properties;

Banks easing policy around investment loans and loan serviceability thresholds;

Internationally, the trade conflict between China and USA and protest in Hong Kong has driven huge amount of funds, private capital and individual investors' money come to seek the safe investment castle, being the Australian property market;

The Media have changed their tune with a lot of positive articles regarding the current property market picking up and forecast potential price growing trend of the properties; and

The continuous high property auction clearance rates in the past months encourages potential buyers to move as competition for property increases

The market has shifted and now is the time to plan your next project. Call me today for the most up to date expert advice of planning, marketing and selling your next project. For more information on the property market and expert advice on your next project please feel free to contact me any time.