[Epoch Times October 14th, 2018] (Epoch Times reporter Ye Xinwen, Sydney, Australia) According to the latest data provided by Juwai.com, China’s largest overseas real estate investment website, Chinese investors in the Australian real estate market last year. With an investment of US$17.4 billion (approximately A$24.5 billion), Australia has become the second largest overseas country to be welcomed by Chinese investors after the United States.
According to the Australian Daily News Network, last year, the total investment of Chinese real estate buyers abroad was as high as 119.7 billion US dollars, while the investment in Australia accounted for 15% of the total investment. Of this, $14.1 billion is invested in housing assets and 3.3 billion is in commercial real estate investment.
Despite the huge amount of investment, compared with 2016, Chinese investors’ demand for real estate in Australia has dropped by 25%, and the amount of investment has decreased by $6.4 billion. Some experts believe that this phenomenon is due to the Chinese government’s increasing tightening of control over overseas investment.
Carrie Law, director of the foreign network, said: “China’s capital controls, bank loan restrictions on offshore investment, and restrictions on foreign investors and tax increases in overseas countries have all led to a reduction in China’s overseas investment. We expect this investment volume to grow moderately this year.” Juwai believes that although Chinese buyers have reduced their investment in Australian real estate, Australia will still be favored by Chinese investors.
In 2017, Chinese real estate buyers invested twice as much in the US as US$30.4 billion in housing investment and US$9.3 billion in commercial real estate investment.
Ms. Luo said: “Although Australia’s real estate stamp duty is very high, in view of Australia’s stable and safe environment, quality educational institutions and high-quality life, Chinese buyers still believe that the country’s real estate has a high investment value in the long run. Most buyers buy their own homes because they have children studying in Australia, or planning to visit Australia frequently, and some want to live in Australia after retirement.”
She said that the tense relationship between the Chinese and Australian governments has not weakened the enthusiasm of Chinese self-occupied buyers to buy houses in Australia. “The tension between the two countries’ political situation has far more impact on commercial real estate investment than on self-occupied home purchases.”
Over the past decade, the surge in overseas investment has led to soaring housing prices in Sydney and Melbourne, which has become a worrying issue.
The December 2016 Ministry of Finance report showed that overseas investment had little effect on the price of self-occupied housing. From 2010 to 2015, overseas investment has increased house prices in Sydney and Melbourne by 80 to 122 Australian dollars per quarter.
The Foreign Investment Review Board (FIRB) believes that the impact of overseas investment on home prices is modest compared to the increase in house prices in the two major cities by a quarterly increase of A$128 million. “Foreign investment in homes is concentrated in Sydney and Melbourne. Although Melbourne has more approval for overseas investment, Sydney’s housing prices have risen even more strongly.”
However, some scholars believe that without more data support, the impact of foreign investment on the Australian real estate market is still difficult to estimate. Dallas Rogers, a real estate expert at the University of Sydney, said the current debate on foreign investment has received much attention, but we still need to look to Australia’s long-term direction. He believes that overall, foreign investment has little effect on Australian real estate, but regulators still have to pay close attention.