Speaking at a press conference last week following the release of McGrath Limited’s profit results, Mr McGrath noted that the real estate network that bears his name has seen a significant reduction in foreign demand due to a combination of factors, including lending changes.
“We saw APRA regulations, the Chinese economy slow down and the contraction of capital outflows, we saw a perfect storm hitting the Chinese market. Subsequent to that we have seen the increased stamp duty on the Eastern Seaboard for offshore buyers,” he said.
“I would estimate that we have seen a reduction of half the overseas or Chinese buyers that we saw this time last year. That doesn’t surprise us. It disappoints us but it doesn’t surprise us, particularly when you think of the lending headwinds that an overseas investor has faced, especially out of China, over the last 12 months.”
Mr McGrath said he expects the reduced demand from Chinese buyers to continue in the short-term, but remains confident it will return. Interestingly, he highlighted that other Asian markets have begun picking up Australian real estate in recent months.
“As the Chinese investment has reduced we are seeing an increased investment from Vietnam, Indonesia and India,” he said. “In a global village where Australian real estate and the Aussie dollar are an attractive proposition for overseas investors, both to move here for lifestyle and also to invest for stability, we don’t think that is limited to the Chinese market. There are other Asian markets that will invest in Australia.”
McGrath’s mortgage business, Oxygen Home Loans, settled over $800 million over the 12 months to 30 June. Mr McGrath said the brokerage has a strong pipeline and is confident growth will continue into the next reporting period.