Property News, Insights & Education

Marvellous Melbourne in Chinese buyers’ sights

  • Foreign buyers bought 5,360 homes or $4.9 billion worth of Australian residential real estate last financial year
  • Treasury’s latest quarterly foreign investment figures show that buyers from mainland China and Hong Kong dominate foreign-based residential purchases
  • Victoria is the largest destination for foreign buyers of residential real estate, with Chinese buyers focused on Melbourne’s CBD and its wealthy eastern suburbs

Property in Melbourne has copped a lot of bad press lately.

 

In my opinion, a lot of that negativity is completely undeserved, especially when you look at the underlying fundamentals of buying and investing in real estate in what is already—by at least one measure—Australia’s most populous city.

 

And while many investors are bailing out of Victoria—3,000 selling out in May alone, according to one calculation—it appears no one has told Chinese buyers.

 

New statistics from the Federal government demonstrate Victoria’s dominance when it comes to foreign property investment in Australia, particularly from foreign buyers based in China.

The details

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Data just released from the Australian Taxation Office’s (ATO) Register of Foreign Ownership of Residential Land shows that during the 2022-23 financial year, there were 5,360 residential real estate purchases with what the ATO says was “a level of foreign ownership.” 

 

The total value of these purchase transactions was $4.9 billion, up from $3.9 billion 2021-22 and $4.2b in 2020-21.

 

By contrast, the total number of sales by foreign persons was only 1,119, with a total value of $1.0 billion.

 

Just under 75% of properties purchased by foreigners were in Victoria, New South Wales or Queensland, with property in Melbourne dominating foreign interest.

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Residential properties with values under $1 million made up the majority of purchases, accounting for 78.2% of property transactions in 2022-23.

This is an increase on the 75.4% recorded in 2021-22.

 

However, the ATO statistics don’t show the country of origin of the foreign investment.

 

For that we have to go to the Federal Treasury, which puts out a foreign investment quarterly report.

 

China dominates

 

Treasury’s latest figures for the quarter between the start of October and the end of December 2023, clearly show that buyers from mainland China and Hong Kong continue to dominate.

Top10-Jun24-2024

In the six months from July the 1st to the 30th of December 2023, buyers from mainland China and Hong Kong got approval to purchase 1,331 homes worth $1.7 billion.

 

The next largest group of purchasers came from India (302 properties worth $200 million). 

 

Juwai IQI runs a portal to help primarily Chinese buyers purchase real estate in other countries.

"The 27% increase in buying last (financial) year shows that overseas buyers were bouncing back after the travel slowdown during the pandemic," says co-founder and group managing director, Daniel Ho.

 

"The number of offshore buyers in New South Wales was flat.”

 

"The number of buyers in Queensland climbed 17%, while the number of buyers in Victoria jumped 32%.” 

 

“Victoria got by far the most millionaire buyers, with 569 foreign buyer transactions worth over $1 million each,” Mr Ho says.

 

Daniel Ho says data from Juwai IQI’s portal shows Melbourne CBD, Point Cook, Doncaster, Southbank and Toorak were the top Melbourne suburbs mainland Chinese buyers were interested in. 

 

REA Group which runs realestate.com.au, says its data shows searches from China for homes in Melbourne focus on the CBD and the wealthy eastern suburbs of Balwyn, Balwyn North, Camberwell and Glen Waverley.

 

Current rules state that international investors can apply for permission to buy only new residences through the Foreign Investment Review Board.

 

Only Australian citizens and permanent residents can buy established property.

 

However, buyers waiting on a decision about Australian permanent residency or citizenship can purchase existing homes, paying considerably more than citizens in stamp duty and tens of thousands of dollars in foreign buyer application fees.  

 

Daniel Ho says foreign buyers boost the supply of housing—as they help fund new developments—but do not drive up prices.

 

However, some real estate agents who operate in Melbourne’s eastern suburbs don’t agree.

 

Andrew Dimashki, a director at Harcourts Judd White—a firm based in Glen Waverley—told Melbourne’s Herald Sun newspaper demand from overseas-based investors and buyers had helped drive median house prices in Melbourne’s eastern corridor by up to 200% in the past decade.

 

“There’s a lot of immigration, and a lot of high-end buyers are coming in from overseas.” 

 

“They have no problem spending a bit more than what a property’s worth, it’s just competition,” he told the paper.