‘Nuts’: Chinese buyers pushing up property prices by millions
Chinese buyers are snapping up some of the most luxurious properties in Australia’s property markets – and they’re doing it with cash.
“They are coming in busloads.”
That’s the description of one frustrated local advocate who say Chinese buyers are snapping up multimillion-dollar luxury properties in Melbourne’s most elite suburbs and pricing locals out of the market.
In Toorak, 100 per cent of sales made by a major agent in the last six months have been to Chinese buyers.
Some are even paying for the properties in cash to secure them.
David Morrell, director of Morrell and Koren, described the situation to news.com.au as “nuts”.
“We are seeing jumps of $2-3 million dollars on properties,” he said.
“We have a market place that is disproportionately being sold to Chinese buyers, relative to the rest of the population.”
Mr Morrell uses an example of a recent luxury property on the market for $9.2 million dollars.
“There were five Chinese parties biding and it sold for $12 million,” he said.
“They have paid a $3 million dollar premium. It wasn’t just one of them there are now four wounded underbidders.”
Mr Morrell said all Aussies should be worried - not just the rich.
“What’s happening in Toorak is only a look at what is happening under the blankets, across the country,” he said.
Mr Morrell is adamant the federal government needs to do more to regulate the Sydney and Melbourne markets in particular from foreign investment to allow locals to compete.
Chinese investment surging
According to NAB’s latest quarterly Australian Residential Property survey foreign buyers are playing an increasingly important role in Australia’s housing market with the share increasing for the fourth straight quarter.
They now account for 10 per cent of the market - a five year high.
Chinese buyers make up the greatest proportion, some figures suggest, on average, they are spending a whopping $8 million a day.
Sydney 2GB radio host Ben Fordham said in July Australia should copy Canada and ban foreigners from buying investment properties.
“The politician who has the guts to do it will be hailed a hero,” Fordham thundered after real estate auctioneer Tom Panos told him the reported $8 million a day was actually a conservative estimate.
Toorak buyer’s agent Alex Bragilevsky boasted to the Australian Financial Review wealthy Chinese buyers were taking private jets to Melbourne to purchase mansions on the spot.
“I’ve facilitated $135 million of real estate deals [in Toorak] in the past six months,” he told the publication. “All these buyers were Chinese.”
Impact on market disputed
Not everyone believes Chinese intervention in the Australian property market is a bad thing.
Jeremy Fox, the director of RT Edgar at Toorak, told news.com.au Chinese buyers are motivated to purchase properties with the next generation in mind.
“They are keen to get money into Australia and into family homes mainly because they want to educate their children in Australia and put their roots down here,” he told news.com.au.
Mr Fox identified the suburbs of Toorak, Armadale, Malvern, Hawkthorne and Kooyong as the most attractive.
“The top schools are along the tram line of those suburbs,” he said.
The minor time zone difference between Australia and China also adds to the appeal.
He disagrees that it is necessarily a bad thing.
“Ultimately, it flows onto the rest of the market, and has protected the housing market from a downturn,” he said.
“It is good for the real estate market when the top end is strong because the money flows down to all price ranges in Melbourne.”
Annabelle Feng, a director at RT Edgar that deals predominantly with the Chinese community concurs.
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“It's not that Chinese buyers are pushing up property prices but rather cash buyers who are not affected by the interest rate hikes,” she insists.
“This can clearly be seen buyer activity outside of markets such as Boroondara and Stonnington have slowed down due to the bank’s tightening on lending.
“Compare this to markets where buyers are not as reliant on the banks, it can clearly be seen that activity in these markets are much higher than others.”