Shanghai | 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 affect 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.
China has previously tolerated significant capital outflows via so called "grey channels" but has tightened up enforcement in recent weeks as the economy slows and fears over capital flight put downward pressure on the currency. The crackdown from Beijing had resulted in Chinese banks setting up watch lists for unusual transactions, according to one bank manager.
He said the operation was aimed at cracking down on a practice whereby family and friends of those wanting to purchase a property overseas all transferred US$50,000 into an overseas account. That's the limit each Chinese individual is allowed to move out of the country each year.
The purchaser then paid back his friends and family in China and used the money from the overseas account to put down a deposit on the property.
However, banks were now tracking the source of funds for overseas bank accounts that had received more than US$200,000 within 90 days, according to the bank manager, who works in Shanghai for one of the major state-owned banks.
"We have always had this policy but now it has been restated and is being enforced more strictly," he said. "In the past, we could find a way around these rules but now all those ways have been blocked. I'm sure this would be having an impact on overseas property purchases."
The crackdown is also said to be affecting trading companies, which have been asked to submit more supporting documents to verify transactions, according to a report in China Business News on Monday.
China's move to tighten its capital controls comes after the country's banks reported net capital outflows of $US109 billion in the first quarter of 2015, according to the Bank for International Settlements.
The People's Bank of China has also been spending record amounts of its foreign reserves to keep the yuan stable after it devalued the currency on   August 11. The devaluation caused havoc on global markets as investors feared it signalled the economy was experiencing a sharper downturn than previously thought.
The tighter rules in China come as Sydney recorded its lowest auction clearance rate for the year this past weekend, while Melbourne has now recorded two weekends below the same time last year, according to Corelogic RP Data.
Credit Suisse estimates Chinese buyers account for about 15 per cent of all new homes purchased in Australia.
Key pointsThe Chinese government has tightened rules to avoid large capital outflows.
The rules are also tipped to affect the Significant Investor Visa program.