The key issue facing foreign purchasers – the credit market

Emma Elsworth and Yuan (Nathan) Xu of Nevett Ford Lawyers Melbourne recently returned from Beijing, China after meeting with various parties involved in Australian real estate.  In their numerous discussions with various stakeholders, the key issue was not:

• the Victorian Government's increase on 1 July 2016 of the foreign purchaser stamp duty surcharge from 3% to 7% on the purchase price of a property,

but

• the lack of tier 1 lenders in the marketplace advancing funds to foreign purchasers of Australian real estate.

The lack of financiers is the number one concern for foreign purchasers, selling agents, brokers, developers and other stakeholders involved in new Australian residential property.  At present, the National Australia Bank (NAB) is the only tier 1 lender loaning monies to foreign purchasers, and its lending requirements have been tightened.  If the NAB exit the market, then foreign purchasers will need to source funds from tier 2 lenders.  The concern is the strain this will place on tier 2 lenders and the current lack of such lenders in the marketplace for foreign purchasers.

Nevett Ford Lawyers Melbourne acts for numerous foreign purchasers and small developers.   The changes in the credit market currently occurring are likely to impact new developments not yet constructed, or under construction. 

If you would like to know more, please contact Peter Lumb, Emma Elsworth, Yuan (Nathan) Xu, Yao (Chloe) Chen or Jianwen Hu of our China Conveyancing and Property Development Team.