Chinese Buyers Drive Surge in Australian Property Investment

The latest data from the Treasury’s Foreign Investment quarterly report showed an uptick in Chinese investment into Australian residential property.

The quarter from 1 January 2023 to 31 March 2023 saw Chinese investors purchase $700,000,000 worth of Australian residential property, equivalent to purchasing $7.7 million of property every single day.

There were 606 approved proposals for foreign investors to purchase residential property in the most recent quarter, up from 440 the previous quarter, in a 25 percent increase.

An international real estate group, Juwai IQI Holdings, has said they’ve received a high volume of enquiries regarding Australian homes from Chinese property buyers, and Australia is sitting as the top priority for Chinese investors.

“The most popular destinations are all the traditional, wealthy Anglo countries with world-leading educational sectors,” said CEO Kashif Ansari.

“Australia, Canada, the United Kingdom, and the United States occupy the top four spots on the list in the first half of the year.”

“Southeast Asia also dominates the list, with Thailand, Malaysia, Vietnam, and Singapore all in the top 10.”

Australia has long been a place of foreign investment interest, but the lifting of Covid19 restrictions has been attributed to the large surge.

Last year’s figures also painted a strong picture, with Chinese buyers snapping up $2.3 billion of Australian property in the nine months from July 2022 until March 2023.

Chinese are getting richer

Interestingly, the Chinese have accumulated large savings over the course of the pandemic, with Selena Li from Reuters writing in September that the number of Chinese millionaires was on track to double by 2026.

An article published on Savings also pointed out that while China’s economy has been slowing, Chinese citizens have been saving, and accumulating wealth at an alarming rate. The Chinese squirreled away $5.3 trillion of savings in the first nine months of last year, despite economic headwinds.

Mr Ansari preempts that, based on this, Chinese demand is only going to increase.

“Even with China’s slower economic growth in 2023, the country is adding more households to the upper-middle and high-income classes than any other,” Mr Ansari said.

“Logically, Chinese demand for international real estate will also increase proportionately.”

Despite the rapid accumulation of individual wealth, China is facing its share of economic challenges.

The Chinese property market is currently in a state of peril, with their second largest property developer, Evergrande, posting a $119 billion loss over the two years of 2021 and 2022.

So it’s likely that Chinese demand will remain strong, as investors interested in property turn their sights to more stable property markets, like Australia.

International demand is putting upwards pressure on property prices

The news of increased Chinese investment comes alongside headlines that large numbers of international students are creating unprecedented demand in Australian property markets. 

Last year, 70 percent of new units added to the market were snapped up by international students.

A report released by the Institute of Public Affairs highlighted the stress that increased migration is placing on housing, with Australia welcoming 250,000 international students last year and a further 187,000 students this financial year.

While these factors certainly add to the demand pressures currently plaguing the housing market, it’s migration and investment that are contributing to Australia’s economic resilience.

Economists have confidence that strong migration figures will help Australia avoid a recession.

But while our economy remains strong, there will undoubtedly be an effect on our property market. 

Overseas investment paired with migration will make it more difficult to secure housing, and add an element of exclusivity to the homeowners club. As always, time is of the essence.