Thousands of Chinese property investors who bought apartments in Australia are still scrambling to save their investments, six months on from a bank clampdown on foreign lending.

Key points: Big four banks spooked by applications with fraudulent proof of income

Big four banks spooked by applications with fraudulent proof of income Banks made changes in effort to reign in lending to avoid being too reliant on Chinese borrowers

Banks made changes in effort to reign in lending to avoid being too reliant on Chinese borrowers Expert says roughly 30,000 investors have been affected by the changes

Earlier this year, the big four banks cut off lending to offshore investors in a bid to reduce the amount of risk they took on.

They were spooked by some applications with fraudulent proof of income, and wanted to rein in lending to avoid being too reliant on Chinese borrowers.

The changes have had a big impact on the property market in Australia, but for the Chinese buyers involved there has been a feeling of crushing disappointment.

David Wang, a Beijing-based property consultant, said there was no shortage of Chinese investors who had been caught out by the changes this year.

"The Chinese clients finalising the purchase of properties in Australia this year probably bought them in the past few years," he said.

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"So that's probably around about 50,000 investors.

"Say about 30 per cent of them are able to pay it all up front, that leaves about 30,000 investors here who are affected — that's quite a large number."

China's banks have cracked down on money heading abroad, so investors have been left trying to borrow from other Asian banks.

Mr Wang said even if Chinese buyers tried to borrow from places like Singapore to fund Australian units, many of them would run into problems getting the loans approved in time.

Property developers in Australia have, in recent months, reported Chinese buyers rescinding their contracts as the squeeze takes hold.

Caught out by rule changes and out of options

While many Chinese investors buy units with the hope of sending their children to study, others like Cai Yiyi simply thought Australia represented a cheaper, safer bet than apartments in China's inflated property market.

Ms Cai put down a $93,000 deposit in January to buy a one-bedroom apartment in the Sydney suburb of Burwood on the urging of a friend working as a property agent in Sydney.

"I think this was my mistake, because I didn't do my research," she said.

"I really wanted to buy this apartment, so I just went with my friend's recommendation."

Since she made that commitment the big four banks halted lending to offshore investors.

Now as Ms Cai's settlement date approaches, she says she has run out of good options.

"Seeing I'm not able to pay the remaining $530,000 up front, I could try to find another bank," she said.

"Otherwise, I could try to on-sell the contract to someone else to at least get the value of my deposit back, but I've heard this is difficult."

Federal Government moves to help address concerns

In an effort to help address concerns about failed settlements by foreign buyers, the Federal Government has moved to make it possible for other overseas purchasers to step in and take up the contract.

In the event of a failed settlement, the changes would mean that the dwelling would still be considered "new" for the purposes of foreign investment rules.

That means another overseas buyer would be able to take over the contract.

"This change addresses industry concerns, and means property developers won't be left in the lurch when a foreign buyer pulls out on an off-the-plan purchase," Treasurer Scott Morrison said.

"It is common sense that an apartment or house that has just been built, or is still under construction and for which the title has never changed hands, is not considered an established dwelling."