Chinese home buyers flocking to Melbourne despite decrease in Foreign Investment Review Board applications

MELBOURNE is the country’s most popular location for Chinese home buyers, despite the number of foreign buyer applications plummeting in the past year.

MELBOURNE is the country’s most popular destination for Chinese home buyers, despite the number of foreign buyer applications plummeting in the past year.

The Foreign Investment Review Board’s latest annual report, to June 2017, showed approval numbers fell by almost two-thirds, from 40,149 to 13,198, during that period — the lowest level since 2013/14.

But figures from Chinese international property website Juwai.com revealed twice as many investors inquired about Melbourne properties than Sydney during the past financial year.

Melbourne is still popular for Chinese buyers looking to break into the housing market.

Juwai.com’s chief executive and director Carrie Law said Victoria was the most popular state for residential real estate approvals from Chinese buyers, followed by NSW, with the two states accounting for 73 per cent of all such approvals.

Ms Law said Queensland accounted for 18 per cent, Western Australia 5 per cent, South Australia 3 per cent and ACT 1 per cent.

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The FIRB report said prior to introduction fees in 2015, foreign buyers often made several applications when considering multiple properties, even though they might have ended up only purchasing a single property.

Juwai.com’s chief executive Carrie Law says Melbourne is popular among Chinese buyers.

“This suggests that the resulting reduction in approvals may not imply a corresponding a reduction in actual investment in residential real estate,” the FIRB report said.

“That is, the actual decline is likely to be lower than implied by the data.”

Ms Law said this year’s data was not directly comparable to that of prior years, due to the change in regulations and buyer behaviour.

“The new data probably gives a closer indication of actual investment levels, because it includes fewer cases of investors who are just acquiring one property seeking multiple approvals,” she said.

Property developer Tim Gurner is less optimistic, telling Leader the downward trend could have dire consequences for housing affordability.

“With FIRB purchaser rates dropping dramatically by more than 60 per cent in the past year, we will see a marked drop in new apartments commencing construction as a result,” Mr Gurner said.

Developer Tim Gurner says the decrease in foreign investment applications could have dire consequences. Picture: Stuart McEvoy

He said not enough homes were being built to supply the increasing population of more than 150,000 each year.

But Ms Law is confident Melbourne will continue to be popular with Chinese buyers.

“Which city is better: Sydney or Melbourne? Many Chinese buyers have decided it’s Melbourne because of its great job market, excellent educational institutions, and — believe it or not — good feng shui,” she said.

According to search data on Juwai, the most popular suburbs for Chinese buyers in the past year were the CBD, Point Cook, Doncaster, Southbank and Toorak.

First National Glen Waverley real estate agent Danny Li said the suburb was still popular among foreign buyers.

“Glen Waverley is still a healthy area because it’s seen as a new Chinese migration area and we’re still seeing a lot of property sold, especially within (good) school zones,” Mr Li said.

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