Chinese property investors were approved by the Federal Investment Review Board (FIRB) to buy $1.6 billion worth of Australian property in the second half of calendar 2022. They represented by far the largest source of international buyers in the period. The feedback from the market suggests these Chinese investors have been making their buying decisions quickly and are generally buyers of new properties. This makes sense as according to FIRB rules international buyers can’t buy established dwellings as investment properties.
With China having reopened its borders in January, most property forecasters expect Chinese buying of Australian property to further escalate through 2023 as there’s significant pent-up demand yet to flow through to the market. It’s a noteworthy development for Australian property investors.
So, why are Chinese investors buying more Australian property?
End of lock-downs
The key reason is that after three years of lockdown, there’s a significant population of Chinese property buyers who’d either like to invest in Australian property or relocate to Australia. As was the case amongst domestic buyers when the Australian lockdown ended, many people were inspired to ask fundamental questions about where they wanted to live and invest. With the prolonged Chinese lockdowns ending in January, we’re only now witnessing the same phenomena across the enormous Chinese population, some of whom have decided they want to own Australian property.
New studying circumstances
In addition, China’s recent decision to stop recognising online courses has resulted in a surge of Chinese students coming to Australia to complete their tertiary education. With soaring rental prices and a shortage of rental properties, wealthy Chinese who have the means, prefer to purchase properties rather than take out a mortgage. They are looking for locations close to quality education options and key amenities which has also contributed to the increase in Chinese investors purchasing more Australian property.
As Landen’s Head of Funds, Jeff Li explains:
‘The Chinese have long been large-scale buyers of Australian property so we’re not surprised to see their buying interest return now China’s lockdown has ended. However, the size and speed of their returning interest are significant from an Australian property market perspective, particularly in the new home market where we’re involved. As we approach a likely interest rate pause by the RBA in the coming months, Chinese buying is expected to further support an Australian property market with improving fundamentals.’