Chinese investors could stop Australia’s property market from collapsing despite diplomatic tensions over coronavirus.
Australia’s economy is widely expected to plunge into recession in 2020 for the first time in 29 years as COVID-19 shutdowns pushed unemployment into the double digits.
The sharpest downturn since the 1930s Great Depression was also expected to cause a plummet in Sydney and Melbourne house prices – with SQM Research forecasting a 30 per cent plunge in median real estate values this year
Nonetheless, China expert Professor James Laurenceson said cashed-up property investors from there were likely maintain an interest in Australian apartments, which could minimise a real estate downturn.
Chinese investors could stop Australia’s property market from collapsing despite diplomatic tensions over coronavirus. China expert Professor James Laurenceson said cashed-up real estate investors from there were likely maintain an interest in Australian apartments, which could minimise a real estate downturn. Sydney Harbour Bridge pictured
‘Traditionally they have focused on the big capital cities, so it would be Sydney and Melbourne with the Gold Coast a close third,’ he told Daily Mail Australia on Thursday.
Professor Laurenceson, the acting director of the Australia-China Relations Institute (ACRI) at the University of Technology, Sydney, said the Chinese economy would also better withstand COVID-19 – giving its citizens more money to spend abroad.
‘Despite the coronavirus shock to the Chinese economy, its wealth hasn’t disappeared,’ he said.
‘There’s been no property price collapse in China and property is one common form of asset for Chinese households.’
He added calls from Cheng Jingye, China’s ambassador in Canberra, for Chinese people to boycott Australian goods and services would be unlikely to stop them from buying Australian assets.
Professor Laurenceson described Mr Cheng’s threat as ‘more bluff’, following calls for an independent inquiry into COVID-19 from Australian Prime Minister Scott Morrison and his Foreign Minister Marise Payne.
Cheng Jingye, China’s ambassador in Canberra, has suggested Chinese people could boycott Australian goods and services
‘We have seen these kind of possibilities raised by the Chinese embassy before,’ he said.
How COVID-19 could hit house prices
SYDNEY: Median price plunges by 30 per cent from $1,020,849 in March to $714,594 by early 2021
MELBOURNE: Median price plummets by 30 per cent from $819,611 in March to $573,728 within a year
SQM Research chief executive Louis Christopher did not expect median house prices in Brisbane, Perth or Adelaide to fall by the same level as those cities were less dependent on skilled immigration before COVID-19
Source: SQM Research forecasts mixed with CoreLogic data
‘We saw them in 2018. Chinese students and tourists were told to be careful of their safety in Australia.’
Previous diplomatic tensions did nothing to diminish Chinese demand for Australian iron ore, coal, tourism and agricultural exports.
Despite China being a one-party Communist state, Professor Laurenceson said its citizens were more likely be persuaded by friends already in Australia and social media sites like WeChat and Weibo.
‘Chinese consumers get their information not only from official Chinese government sources,’ he said.
‘Many Chinese households know students who are already here, they know family members who’ve been to Australia for tourism activities before so they’ve got their sources of information.’
Former Labor foreign minister Bob Carr said Australia’s economic recovery would depend on its biggest trading partner, China.
‘There is no scenario for economic and budget recovery in Australia that is not dominated by Chinese demand,’ he told Daily Mail Australia.
‘Nothing takes its place. India and Indonesia do not come close.’
The International Monetary Fund is expecting China’s economy to grow by just 1.2 per cent in 2020, as India expanded by 1.9 per cent.
Professor Laurenceson described Mr Cheng’s threat as ‘more bluff’, following calls for an independent inquiry into COVID-19 (bats at a Chinese wet market pictured) from Australian Prime Minister Scott Morrison and his Foreign Minister Marise Payne
By comparison, Australia was expected to shrink by 6.7 per cent, compared with a 5.9 per cent contraction in the United States.
Earlier this month, SQM Research predicted a 30 per cent property price plunge in Australia’s biggest city, with the market bottoming out later this year or in 2021.
That would see Sydney’s mid-point house price plummet from $1.02million in March to $714,594, hitting a last unseen since late 2014, going by CoreLogic data.
This would see Melbourne’s equivalent values fall from $819,611 to $573,728, the lowest since late 2013.
CoreLogic real estate data for April is being released on Friday.