How Chinese buyers are snapping up Australian properties at the rate of $6million a day

Chinese buyers are snapping up real estate spending more than $6million a day, with Australia an even more popular market than Canada, the United Kingdom or the U.S.

New Treasury figures show the Chinese spent $2.4billion on Australian residential real estate in 2021-22, with investment surging in the following financial year. 

That equated to $6.6million a day, with investors from China spending significantly more than residents from anywhere else.

The Chinese bought 2,317 homes in Australia in one financial year.

Hong Kong, which is part of China, was a distant second with investors spending $600million buying or investing in 689 homes, ahead of Vietnam’s $400million, for 391 properties.

But the Australian figures are even more dramatic when the data for July 2022 to March 2023 was covered.

During those nine months alone, Chinese investors spent $2.3billion, which would equate to $8.4million a day, snapping up 1,775 properties.

Those from Hong Kong spent $400million, buying 467 properties.

Juwai IQI, which markets real estate to Chinese investors, said it had received more enquiries about Australia than Canada, the United Kingdom or the U.S. 

Kashif Ansari, the chief executive and a co-founder of Juwai IQI, said Chinese demand for Australian property coincided with Chinese interest in studying at an Australian university. 

‘The most popular destinations are all the traditional, wealthy Anglo countries with world-leading educational sectors,’ he said.

A downturn in China’s property market, following problems with apartment building giant Evergrande, has also encouraged Chinese investors to consider rich, world-world nations, especially ones where English is spoken.

‘Overseas, Chinese investors are drawn to real estate investment as an easily understood category that is expected to provide price appreciation and dependable long-term foreign currency income that is uncorrelated with the Chinese economic cycle,’ Mr Ansari said.

Australia’s interest rates are also at an 11-year high of 4.1 per cent, to battle high inflation.

China is grappling with the opposite problem, potential deflation, as consumers there reduce spending despite a recent rate cut.  

This means Chinese investors have more savings and see more potential for property price growth in Australia than their home country.

‘In this era of higher interest rates, Chinese investors with access to ready capital have an advantage over local buyers,’ Mr Ansari said.

Kashif Ansari, the chief executive and a co-founder of Juwai IQI, said Chinese demand for Australian property coincided with Chinese interest in studying at an Australian university (pictured is UNSW at Kensington in Sydney’s south-east)

Australia was the top choice for Chinese buyers in the year to June 2023, followed by Canada, the UK, United States, Thailand, Malaysia, Japan, the United Arab Emirates, Vietnam and Singapore.

By 2025, Juwai IQI is expecting 70,000 people to move from China to Australia as 712,000 Chinese people relocate to Australia, Canada and the United States.

Overseas demand for Australian real estate is strong with Treasury expecting a record 400,000 migrants to have moved to Australia in 2022-23.

Over five years, 1.5million migrants are set to move to Australia by July 2027 when arrivals were subtracted from departures, the Treasury Budget papers revealed in May.

Under Australia’s foreign investment rules, foreigners can’t buy established houses or apartments but they can buy brand new properties.

That means foreigners who aren’t permanent residents in Australia are restricted to brand new apartments and house and land packages.

Sydney radio 2GB broadcaster Ben Fordham suggested many of these foreign-owned properties were left vacant during a rental crisis.

‘Many of these investment properties are left vacant. How is that helping anyone?’

Fordham suggested Australia ban foreigners from buying investment properties after Canadian Prime Minister Justin Trudeau this year imposed a two-year ban.

‘We should be following the lead of Canada and outlawing it,’ he said.

‘And the politician who has the guts to do it will be hailed a hero.’ 

Unlike Australians, foreigners who don’t pay income tax in Australia can’t claim rental losses on tax – an arrangement known as negative gearing, giving them less incentive to have tenants. 

Australia’s rental vacancy rate in June stood at 1.3 per cent, SQM Research data showed.

CoreLogic’s head of research Eliza Owen said the rental crisis would end once the Reserve Bank of Australia stopped increasing interest rates, following 12 rises since May 2022.

‘As inflation moves past its peak, the RBA is getting closer to the end of rate hikes,’ she said.

‘This could be good news for renters, because growth in rent values usually tracks roughly with movements in the cash rate. 

‘Not only is the cash rate expected to peak this year, but each of the major banks is now forecasting a reduction in the cash rate through 2024.’

The RBA left the cash rate on hold at an 11-year high of 4.1 per cent in July but the 5.6 per cent inflation rate is still well above its 2 to 3 per cent target. 

That means more rate rises are likely in 2023, with Westpac expecting two more increases that would take the cash rate to a 12-year high of 4.6 per cent.