The exchange rate may be in their favour, but Australia’s Chinese property investors have been notably spooked by political and financial policies, leading to a sharp decline in property investments in 2017 – 18.
Chinese investment in Australian real estate dropped 17% to $12.7bn, down from $15.3bn the year before, according to a new report from the Foreign Investment Review Board (FIRB).
The sharp fall came in response to several concurrent factors, according to Carrie Law, CEO and director of Juwai.com.
“Chinese buying in 2017-18 was most impacted by three factors: the unexpected cancellation of promised mortgage loans by Australian banks, higher foreign stamp duty taxes, and capital controls making it more difficult to move money from China,” said Law.
“The FIRB data is already nine months old…. Our data suggests the fall in Chinese demand is over and we expect Chinese buying to be flat in 2019,” she added.
Executive chairman and CEO of N1 Holdings Ren Hor Wong believes that the general perception that Australia does not welcome foreign investments, may also be a key factor.
The drop in interest has been felt in both residential and commercial real estate investments and, according to Wong, Asian investors are taking their business elsewhere in the face of the policy- and politically-driven risks they perceive in Australia.
He explains, “Foreigners are diverting interests to other countries, including emerging economies like Sri Lanka.”
However, even with the 17% decrease, one out of every four dollars generated by foreign real estate deals in Australia still came from China, and Law says several urban and regional hotspots remain buoyant investment destinations.
Melbourne, Sydney, Brisbane, Adelaide, and Canberra lead in the cities, while the most popular regional destinations were the Gold Coast, Newcastle, the Sunshine Coast, Cairns, Wollongong, and Geelong.
“The Chinese buyer who set a building record by paying $4.5 million for a second-hand apartment in downtown Brisbane is just one of many examples that show Chinese buyers are still important,” Law said.
