Chinese buyers are being forced to offload apartments in Australia because of economic turmoil back home, a leading economic commentator says.
The real estate crash and other economic turmoil in China has led to a stampede in selling off apartments mainly located in Sydney and Melbourne, according to leading economic commentator Robert Gottliebsen.
Already an estimated 20 per cent of apartments owned by Chinese living in the mainland have been sold, Gottliebsen claimed in The Australian.
The influx of units dumped on the market is likely to be a major windfall for desperate Aussies hoping to get on the property ladder – or established buyers looking to scoop up bargain.
Chinese investors are being forced to sell inner-city apartments in Sydney and Melbourne (pictured high-rise apartment units on Kent St, Sydney). Daily Mail Australia asked Meriton whether there had been a large sell-off of apartments in Sydney but it declined to answer the question
‘A large number of the Chinese who bought apartments in Australia wanted assets outside of China, just in case the communist Chinese government made life intolerable,’ Gottliebsen writes.
‘Chinese families who are selling Australian apartments do not want to sell, but they have no choice.’
Gottliebsen said the main thing driving sales has been the real estate slump in China, with many Australian apartment owners being squeezed by having to pay off unbuilt investment properties in China that are collapsing in value.
China has seen properties fall in value by three quarters in major cities after a real estate boom fuelled by buyers borrowing heavily to purchase apartments ‘off-the-plan’ was brought to a shuddering halt by the government fearing a ‘bubble’.
‘Many never anticipated completing the (Chinese apartment) purchases and planned to sell quickly and make a trading profit,’ Gottliebsen writes.
China’s slowing economy has led to scenes of mass unrest, including protesting factory workers in Chengzhou central China (pictured)
‘But the slump in apartment values makes trading close to impossible, so other family assets, like Australian apartments, must be sold.’
The crash in cryptocurrencies and the continuing impact of harsh Covid clamp-downs were also contributing factors to Chinese buyers needing to get some quick cash, Gottliebsen said.
The harsh Covid measures and the disintegration of China’s property market are spurring protesters onto the streets as the economic turmoil presents a rare challenge to the iron grip of President Xi Jinping and the ruling communist party.
Chinese buyers have mainly purchased inner-city apartments in Sydney and Melbourne but there was a significant difference between the two cities, according to Gottliebsen.
He said Sydney’s biggest apartment marketer the Meriton group had asked buyers to rent their apartments, which meant they had an income stream.
Economic commentator Robert Gottliebsen says an estimated 20 per cent of apartments owned by overseas Chinese in Sydney and Melbourne have already been sold
However, Melbourne apartments mostly remain empty.
According to financial giant Credit Suisse, Chinese buyers purchased about a quarter of the new housing coming onto the market in NSW in 2017, while in Victoria they snapped up about 17 per cent and in Brisbane, 8 per cent.
Meriton was asked by Daily Mail Australia whether there had been a large sell-off of apartments in Sydney but declined to answer the question.
The sale of apartments may add to the downward pressure on the Australian property market, which saw a 1.2 per cent slump in the month of October.
This continued the dampening of the property market as the Reserve Bank’s interest rate hikes, which amount to a 2.5-percentage-point increase since May, apply the brakes in an attempt to curb Australia’s runaway inflation.
The crash in cryptocurrencies and the continuing impact of harsh Covid clamp-downs were also contributing factors to Chinese buyers needing to get some quick cash by selling Australian real estate
Property prices fell in all the major capitals with Brisbane seeing the biggest decline of 2 per cent, while Sydney homes lost 1.3 per cent of value and Melbourne properties 0.8 per cent.
House prices fell at a faster rate than those for apartments, according to Property data firm CoreLogic.
Westpac has warned of an 18 per cent plunge in house prices with more interest rate rises expected next year – leading to falls in value of more than $200,000.
Sydney and Melbourne are expected to suffer the sharpest falls in late 2022 and 2023.
Falling property prices have not been reflected in lower rents so far.
In 2017 Chinese buyers snapped up large percentages of the new housing in Sydney and Melbourne, according to financial giant Credit Suisse
The national rental vacancy rate fell from 2.1 to 1.3 per cent during the pandemic, and rent prices rose by 14.3 per cent.
Adding to the shortage has been the influx of temporary visa holders starting to flood back into the country since Australia reopened its borders after the Covid pandemic.
On average, rents have soared 10.3 per cent in Australia since the start of 2022 with a low supply of housing and the reopening of borders contributing to the squeeze.
The national rental vacancy rate is at a record low 0.9 per cent, according to Domain research data.