It has been revealed that Chinese nationals are currently the primary investors in the Australian residential market and have chosen it as their top destination to invest their money.
The Australian Treasury’s foreign investment report for Q4 2022 shows that a total of $20.7 billion was invested in the real estate sector, with the majority of the investment, $19.3 billion, directed towards the commercial market. Meanwhile, only $1.4 billion was invested in residential real estate during the same period.
There was a decrease in the overall volume of proposals and the total value of investments in the residential sector between the September and December quarters of the previous year. In the second-to-last quarter, 1,972 proposals worth $2.9 billion were received, while in the final quarter of 2022, only 1,224 proposals with a value of $1.4 billion were lodged.
China has maintained its position as the leading foreign investor in the Australian residential market over the past two financial years (2020-21 and 2021-22), with investment proposals from China valued at $600 million for the quarter. Hong Kong and Vietnam followed with proposals worth $100 million each.
Chinese investors’ interest in Australian property is so high that Daniel Ho, the co-founder and group managing director at Juwai IQI, has stated that “Australia is the most popular country for Chinese home buyers” for the first time ever.
Although there was a decrease in the investment rate between the September and December quarters last year, Chinese buyer inquiries for Australian real estate increased by 24% in the final month of 2022. Mr. Ho explained that this rise was due to announcing the reopening of borders.
Mr. Ho stated that based on current investment rates, China could invest an estimated $3.2 billion into the Australian residential real estate market this year. This would significantly increase from the $2.4 billion invested in the 2021-22 financial year.
Expanding on this point, Fiona Yang, the executive partner at Plus Agency, a project marketing agency with offices in Chatswood and Shanghai, mentioned that her network had seen a significant increase in Chinese buyers. According to her, there are now five times more Chinese buyers than before, and they are hurrying to make purchases.
Ms. Yang observed that during the first two months of 2022, 15% of her office’s walk-in buyers were from overseas. However, this figure has increased dramatically and now stands at 75%.
Ms. Yang stated that such buyers are showing a solid commitment to Australia, mainly since the pandemic-related uncertainty is over, the borders are now open, and rents are rising. These buyers are tired of three years of lockdown.
She believes one of the driving trends behind the increased investment demand is the decision of satellite families to stop dividing their time between countries and instead move to Australia permanently.
Ms. Yang explained that most families are eager to purchase their own homes as soon as possible due to the high rental rates.
However, the guidelines from the Foreign Investment Review Board (FIRB) currently in place and the fact that many prospective buyers have resided in China for the past three years prevent them from purchasing existing dwellings. They are only allowed to buy new homes.
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