Cashed-Up Foreign Buyers Fuel Australian Property Market Boom, Raising Fears of Rising Prices

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Chinese buyers are once again entering the Australian property market and driving up property prices, according to recent reports. Prolonged Covid-19 lockdowns in China have sparked a massive influx of cashed-up Chinese buyers in the Australian property market. The foreign buyer market share in New South Wales recently soared to its highest level in eight years of 16.2 per cent during the first quarter of 2023, up from 6.7 per cent in the previous quarter, according to the NAB Residential Property Survey (Stevens, 2023). This increased demand is causing chaos in the Australian property market and pushing up the prices of luxury homes, brand new units, and large blocks of land.

Following the reopening of borders and lifting of lockdown restrictions, Chinese buyers are seeking a better life in Australia. Many are moving back to Sydney, where they have established ties through permanent residency or have family residing there (Stevens, 2023). “The demand has always been there,” says Ray White Upper North Shore agent Jessica Cao (Stevens, 2023). However, the limited supply has pushed up prices on everything from lots of land to luxury homes.

In addition to the increase in Chinese buyers, other foreign buyers are also returning to the Australian property market. According to official figures, China was the largest source of investment in Australian residential real estate, with $1.6 billion invested in the six months to the end of December last year (Hussain, 2023). This number is expected to continue climbing following Beijing’s decision to reopen its borders in early January (Hussain, 2023). John Kehoe, Economics editor of the Financial Review, warns that this increase in foreign property purchases could lead to trouble for Australians in the long-term: “Over time, when you’ve got more people buying from abroad, more people coming here from immigration, that will support property prices upwardly in the medium term” (Hussain, 2023).

Chinese property experts, such as Juwai IQI co-founder Daniel Ho, believe that Australia is the most popular destination for people from China seeking foreign property. He explains, “In January, Chinese buyer inquiries for Australian real estate surged by 24 per cent compared to December, due to the announcement that borders would be reopening” (Hussain, 2023).

This property boom comes as Australia is facing a massive housing crisis amid surging interest rates. Emma Greenhalgh, the CEO of housing charity Shelter, describes the situation as a “national emergency” (Hussain, 2023). The crisis affects not only capital cities and major metropolitan areas but also regional and rural areas. As house prices and vacancy rates become increasingly unaffordable, more people are forced into overcrowded rentals, living in tents, or even in cars (Hussain, 2023).

To combat the housing crisis, experts call for a joint effort from all levels of government, improvements in rental laws, and disincentivising vacant and holiday homes (Hussain, 2023). In the meantime, the influx of foreign buyers continues to impact the Australian property market, leaving locals to grapple with the consequences.

References:

Stevens, K. (2023). The two reasons why cashed-up Chinese buyers are returning to snap up Aussie real estate – driving up prices for certain types of property: ‘They’ve distorted the market’. Daily Mail Australia. https://r.search.yahoo.com/_ylt=AwrKC3PkRVhkBM8NP8qzRwx.;_ylu=Y29sbwNzZzMEcG9zAzUEdnRpZAMEc2VjA3Ny/RV=2/RE=1683535461/RO=10/RU=https%3a%2f%2fwww.dailymail.co.uk%2fnews%2farticle-12048927%2fChinese-buyers-return-Australian-real-estate-market-huge-numbers-driving-prices.html/RK=2/RS=LB5qpJgSvyoFJCSc26iudzyNbLU- 

Hussain, D. (2023). Chinese buyers return to Australia’s housing market and snap up properties sparking fears prices could rise even further. Daily Mail UK. Retrieved from https://www.dailymail.co.uk/news/article-11841669/Foreign-property-buyers-flooding-Australian-market.html