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Chinese nationals remain the most prominent investors in the Australian residential market, and it’s now the number one place they park their money, it’s been revealed.
According to the Australian Treasury’s foreign investment report for the December 2022 quarter, in the three months to December, $20.7 billion was invested in the real estate sector, with an overwhelming majority ($19.3 million) entering the commercial market, compared to $1.4 billion funnelled into residential real estate.
Both the total volume of proposals and the total value of investment into the residential sector declined between the September and December quarters of last year. In the penultimate quarter, 1,972 proposals were received at a value of $2.9 billion, whereas the final three months of 2022 saw 1,224 proposals lodged with these worth just $1.4 billion.
As has been the case across the past two financial years (2020–21 and 2021–22), China remained the dominant residential foreign investor, with investment proposals from the nation valued at $600 million for the quarter, followed by $100 million in proposals received from Hong Kong and Vietnam.
So strong is the Chinese interest in Australian property right now that Daniel Ho, co-founder and group managing director at Juwai IQI, revealed it’s “the first time ever” that “Australia is the most popular country for Chinese home buyers.”
Despite a declining rate of investment between the September and December quarters last year, Mr Ho outlined that Chinese buyer inquiries for Australian real estate jumped 24 per cent when compared to the final month of 2022 “due to the announcement that borders would be reopening.”
He explained current rates of investment could see China inject “an estimated $3.2 billion in Australian residential real estate this year, which would be up from the $2.4 billion in 2021–22.”
Building on this, Fiona Yang, executive partner at Plus Agency, a project marketing agency with offices in Chatswood and Shanghai, outlined that her network has “five times more Chinese buyers than before, and they want to buy quickly.”
During the first two months of 2022, Ms Yang noted 15 per cent of her office’s walk-in buyers were from overseas. Currently, this figure has ballooned to 75 per cent.
She declared such buyers are “committed to Australia,” especially given “the pandemic-related uncertainty is past, the closed borders are open, rents are hot, and these buyers are fed up with three years of lockdown.”
She believes one trend that may be driving increased investment demand is the breakdown of satellite families who’ve decided to “stop splitting themselves between countries and are moving to Australia permanently.”
Due to soaring rents, Ms Yang explained most families “want to get into their own homes as quickly as possible.”
However, current guidelines from the Foreign Investment Review Board (FIRB) paired with the fact that many of these prospective buyers have resided in China over the past three years prevent them from purchasing existing dwellings, only new homes.
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