China is no property saviour

Measures by China's central government to cool its once bubbling property market are continuing to yield results, with figures from the National Bureau of Statistics (NBS) showing a 17.5 per cent drop in the number of home sales in the first quarter this year. According to the bureau, new house prices in 45 out of 70 cities declined in February, while 21 cities reported no change in price. The Beijing Real Estate Association reports prices for new residential houses in Beijing are down 20.7 per cent year on year.

China has just reported the slowest economic growth in three years, with GDP falling to an annualised growth of 8.1 per cent for the first three months of this calendar year.

Late last year, under the headline "Chinese prop up property market,” The Australian Financial Review suggested the Chinese were the only thing keeping Harry Triguboff's "cement mixers turning”.

Last week at the opening of Meriton's Vantage apartment block in Rhodes, New South Wales, Triguboff said interest rates were too high, demanding the RBA's governor, Glenn Stevens, drop rates: "He has to drop. I can't believe it's that high.”

He told The Australian Financial Review, "It got to a stage [last year] where I had 85 per cent of purchasers who were Chinese, and now it's down to 65 per cent.”

"We're very happy with Chinese coming here, but we must have our own.”

If we assume there hasn't been a surge in domestic buyers as interest rates are apparently too high (not the price and leverage required to purchase one), then the figures can only mean one thing. Fewer Chinese are buying Harry's apartments. Could falling house prices back in mainland China have the Chinese questioning if property always goes up?

In late 2008, the Rudd government made administrative changes to Foreign Investment Review Board legislation, which could be seen as one measure to encourage foreign buyers to purchase our property and help keep demand up for our ailing property market.

If this is the case, it could be another lifeline gone in the 'who wants to be a property millionaire' game show.

Craig Peacock runs a blog called "Who cra$hed the economy?". You can read his posts here.