http://www.macrobusiness.com.au/2012/01/melbourne-apartment-glut-builds/
According to the latest Tax Office data, Melbourne had 290,000 property investors in 2008-09, with above average concentrations in the inner-city areas of Southbank, Docklands, and the St Kilda Rd precinct. Given most of these investors are negatively geared, and Melbourne’s gross rental yields – at 3.7% for houses and 4.3% for units – are already the lowest in the nation and unlikely to see strong growth over the foreseeable future, it will interesting to see whether the bulk of Melbourne’s investors choose to remain in the market or exit en masse.
(Note: ATO figures indicate 60% of PI’s are negatively geared)
Given that Chinese investors pour per year approx $1b in to Melbourne and $2b in to Sydney property markets I doubt we’ll see an “en masse”
exit at this stage. Chinese tend to view investment differently than us. They look at property as a store of value. Somewhere to locate their money that at worst doesn’t depreciate and hopefully stays ahead of inflation and costs.Without the Chinese I think the Melbourne and Sydney markets would look considerably worse than they are now.
The question is will mainland China stay stable enough to not motivate Chinese investors here to exit in order to cover losses at home.
The Freckle
No offense to anybody here. But if you choose to buy one of the squillions of new, off-the-plan apartments within the CBD area, then good luck to you anyway. People might buy these apartments for the 'stamp duty savings' and the 'guaranteed rental return', plus the impression that they should be easy to rent. However they do this without considering the sheer number that are being built, and hence the competition that they are likely to face. Furthermore, in buying these little shoeboxes, they are not considering that young couples looking for more space and privacy, and eventually looking to start a family, will look for a place with some sort of backyard like a house in the 'burbs.
Those who live in inner-city apartments are probably also more transient, leading to a higher turnover of tenants and hence increased costs in terms of advertising and leasing fees. I personally bought in one of Melbourne's outer suburbs, vacancy rate sitting at 1.6% at the moment, scores better than what we're seeing in some parts of Melbourne. Key thing is to buy to meet demand, not hope that demand will meet your purchase.
The Chinese would see Australia (in general) as being high on the livability index compared to their homeland. Furthermore, they may also see the potential here because they have witnessed first-hand, the nature of property prices in their homeland. This attracts them to invest. And the ones that DO invest here have heck of a lot of money. I get this impression that there is a great disparity between the haves and have-nots in China. A lot of them are struggling to feed their family of 10 children, but there's the bunch of mega-rich who are quietly (or sometimes, not-so-quietly) investing in other countries.
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