Given the recent admission by the Australian Central Bank that property prices “have gone crazy,” it appears new Chinese ‘regulations’ may just kill Australia’s golden goose of ‘wealth creation’ as Aussie’s largest trade partner sees its economy collapse. While the Aussies themselves proclaimed a “war on cash,” it appears, as AFR reports, that Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing’s move to tighten capital controls. With Chinese banks now limiting any overseas transfer to USD50,000 – in an effort to control capital outflows – and with China dominating the Aussie housing market, one agent exclaimed, “it has affected 70 to 80 per cent of current transactions and some have already been suspended.”

To date Chinese investment has been overwhelmingly focused on the most familiar capital city property markets of Melbourne and Sydney, with around 80 per cent of foreign investment hitting Victoria and New South Wales. As PeteWargent shows, China dominated the foreign buyer of Aussie homes…

As Bloomberg notes, Chinese buyers were approved to buy A$12.4 billion ($9.9 billion) of Australian real estate in 2013-14, the Foreign Investment Review Board said in its annual report, without differentiating between commercial and residential property. China’s total approved investment in Australia was A$27.7 billion over the period, compared with the U.S.’s A$17.5 billion.

And Q1 2015 showed no signs of a slowdown in that flood of capital to Australia…

But now, as AFR reports, China’s capital controls will kill that flow of money into Aussie property…

Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing’s move to tighten capital controls.

One Chinese agent said the latest efforts by the central government to avoid large capital outflows were having a “significant impact” on his business.

“It has affected 70 to 80 per cent of current transactions and some have already been suspended,” said the agent who asked not to be named.

The tighter foreign exchange rules are also set to impact the federal government’s relaunched Significant Investor Visa (SIV), which provides fast-tracked residency for those investing at least $5 million into Australia.

“I think it will be big, big trouble for the SIV program because the amount of money is just too large,” said one Shanghai-based adviser, who sells Australian property and advises wealthy clients on their migration plans.

Only seven SIV applications have been submitted since the new rules were introduced on July 1, which require investors to put their money into riskier assets such as venture capital and emerging companies.