The Reserve Bank of Australia (RBA) says that Chinese demand for Australian residential property has eased.
Many analysts have predicted and observed the cooling effect this is having on the Australian property market.
RBA’s head of financial stability Jonathan Kearns said that foreign buyers account for around 10% to 15% of new construction and about 5% of housing sales in Australia.
He estimates that about three quarters of those foreign buyers come from China.
The cool off is due to tougher restrictions from both the Australian and Chinese governments.
Record-high house prices, particularly in Sydney in Melbourne, have been prohibitive for first homebuyers and had led some to fear a bubble.
The tighter restrictions were imposed here to curb the Chinese spending spree on Australian property.
Meanwhile, the Chinese restrictions came about as Beijing became concerned about “irrational” investments abroad.
China still spends a massive amount of money on Australian property, but the cooling is being felt.
“The run up in commercial property prices raises the risk of a sharp correction, for example if there is a change in sentiment or a pick-up in long term interest rates,” Kearns said,
Although the RBA has left rates at a record low of 1.5% for 15 consecutive months, ANZ recently predicted a rate hike by winter.