While a newly released report confirmed the continued decline of foreign investment in Australian property over the 2018-2019 financial year, the unique confluence of current events may be the catalyst necessary to change the tide – particularly for Chinese investors.
“Chinese buying in Victoria plummeted after 2016 for three reasons. The Australian banks stopped lending to Chinese buyers, the Victorian government imposed a steep foreign buyer stamp duty, and Beijing started cracking down on the movement of money out of China,” explained Juwai IQI executive chairman Georg Chmiel.
“Those factors have all started to unwind. Today, non-bank lenders are again willing to finance Asian buyers. The 8% stamp duty doesn’t look so large when compared to the 20% taxes in places like Singapore and Vancouver. And, after years of globalisation, Chinese have accumulated more overseas wealth that they can freely invest outside of China.”
Further, the COVID-19 pandemic is playing an unexpected role in fanning the sparks of foreign interest into flames.
“In April, Chinese buyers made twice the number of enquiries on Australian real estate as in any other month so far this year and 50% more than in any month in the second half of 2019,” said Chmiel.
“There may have been a great deal of pent-up activity taking place in April, so we don’t expect Chinese buyer enquiries to remain at this height for the rest of the year, [but] the data shows that Chinese buyers are back.
“Australia was already appealing as a safe country where your investments are protected. Now, the country seems to have managed the pandemic well. That makes it even more appealing to foreign buyers.
“Marketers in China are already using Australia’s good performance to persuade parents of children who have been studying in the US and the UK to look at Australia instead.”
Melbourne is the top Australian city for Asian buyers, followed by Sydney and then Brisbane. At least three-quarters of Chinese buyers are looking for property valued less than $1 million, and the median enquiry price comes in “quite low”, at around $610,000, according to Juwai.
The 2018-2019 Foreign Investment Review Board report indicated that mainland Chinese real estate investment into Australia dropped to $6.1bn over the period, down more than 50% from 2017-18 and its lowest level since 2012-13.
However, Hong Kong Chinese investment into Australian real estate more than tripled, from just $2.8bn in 2017-18 to $9.3bn last year, while both Singapore and Japanese investment also increased by $2bn and $1.5bn respectively.