FIRB data shows Chinese buyers are back for Australian real estate market - Juwai IQI

Monday 11 May 2020

Australia's relationship with China may have come under scrutiny across the past couple of weeks in relation to COVID-19 but new data from the Foreign Investment Review Board indicates real estate investment from the Asian country is on the rise.

According to the FIRB annual report for 2018/19, mainland Chinese real estate investment into Australia in 2018-19 dropped to $6.1 billion, down more than 50 per cent from 2017-18 and its lowest level since 2012-13.

But figures for the second half of 2019 and April 2020 show Chinese demand may be coming back, with buyers from the country investing more than foreign counterparts from all except three countries.

Juwai IQI Executive Chairman Georg Chmiel said the tide may finally be turning following three years of decline.

“Chinese buying in Victoria plummeted after 2016 for three reasons," he said.

"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.

"Today, non-bank lenders are again willing to finance Asian buyers, and the 8 per cent stamp duty doesn’t look so large when compared to the 20 per cent taxes in places like Singapore and Vancouver.

"Add this to the fact that, after years of globalization, the Chinese have accumulated more overseas wealth that they can freely invest outside of China."

Post-coronavirus resurgence

According to Juwai IQI, Chinese buyers made twice the number of enquiries on Australian real estate in April as in any other month so far this year and 50 per cent more than in any month in the second half of 2019. 

Mr Chmiel said while the data indicated Chinese buyers were indeed back, the trend may have also been the result of pent-up activity, meaning it was unlikely to be sustained for the rest of the year.

"The Coronavirus has created exceptional circumstances," he said.

"While Chinese buyer demand in January remained strong, the lockdown in Victoria forced the number of Chinese buyer enquiries down in February and March.

“Australia was already appealing as a safe country where your investments are protected.

"Now, the country seems to have managed the pandemic well, making it even more appealing to foreign buyers."

Mr Chmiel said marketers in China were 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.

“The biggest challenge in the first quarter has been getting interested buyers, whether foreign or local, to the closing," he said.

"The travel restrictions and social isolation measures made that difficult. 

"Now, the Australian market is beginning to open up slowly.

"That’s a positive development that will make marketing and closing sales progressively easier."

- The Economy