Housing affordability crisis: Buyers in China snap up $8m of Australian property every day

People in China are spending nearly $8 million a day on Australian property – vastly more than buyers from anywhere else in the world. See the figures.

People in China are spending nearly $8 million a day snapping up Australian property – vastly more than buyers from anywhere else in the world, new figures reveal.

But the true level of real estate purchases by foreigners is likely much higher, a leading expert claims.

People in China invested about $700m into Aussie housing in the first three months of this year, Treasury data shows. That’s about $7.8m a day.

Hong Kong, which is part of China, was the second on the list of foreign investment at about $100m over the quarter, followed by Vietnam, Taiwan, Singapore and India.

Residential real estate investment from China during the first three quarters of 2021-22 has reached $2.3 billion – nearly eclipsing the $2.4bn spent during the entirety of the previous financial year.

China is the leading source of foreign investment in Australian real estate. Picture: FIRB

Treasury and the Australian Taxation Office were unable to provide a breakdown of purchase levels by state.

But older data and research suggests Sydney is the second-most popular place to buy after Melbourne, and that nearly all purchases are newly built homes.

Real estate agency PRD’s chief economist Diaswati Mardiasmo said the true level of foreign buying was a “grey area” because the official data was based on citizenship and the address of the purchaser.

“What they can’t really do is track where the money comes from,” she said.

For example, a purchase by an Australian passport holder financed by someone overseas would not show up in the official data.

PRD Chief Economist Dr Diaswati Mardiasmo. Picture: Supplied

Some countries, including New Zealand and Canada, have all but banned foreign purchases of residential real estate.

Dr Mardiasmo said that while imposing tougher limits in Australia would reduce overall demand, it could also cut supply.

Lenders which finance some large projects – for example, apartment towers – only release funds if presales targets are hit. Foreign buyers are key markets for apartment presales.

If these projects don’t go ahead due to a lack of presales, it means there is no opportunity for Australian owner-occupiers to buy other homes in such developments.

There would also be a reduction in housing stock available for local investors who would make their property available to renters.

“It’s a fine line – a very fine line,” Dr Mardiasmo said.

On Tuesday, The Daily Telegraph detailed new research from the Institute of Public Affairs showing that over the past year 38,098 households were formed in Sydney by foreign students landing in Sydney – vastly more than the 25,900 new dwellings completed.

That trends is expected to persist in the coming year, the research suggested.

The Property Council of Australia’s head of student accommodation Adina Cirson said “blame should not fall squarely at the feet of increased international student numbers, when planning, taxation, building costs, archaic approaches to rental reform and a lack of land supply.”